Value of expired BMY CVR

[seattletom1]

Can someone advise me on how to report the expired CVRs from the Bristol Myers/ Celgene merger?  I received these as an employee.  I did not purchase.  The conditions of the CVR were not met so they expired. 

The 1099 I received has a cost basis for each lot on the supplemental section.  Do all of the expired CVRs get reported as a loss?  To me, since I didn’t purchase them, I didn’t sell them, and they ended up worthless, something seems wrong.

Thanks

[DaveF1006]

It depends. To clarify, how does your form 1099-B read? 

[seattletom1]

1099-b has: (expired for action), (quantity), (date acquired), (date disposed), then zero for 1d, 1e, and gain/loss.

the 1099 supplemental has: (type RSU), (quantity), (date acquired), (date disposed), (proceeds 0), (ordinary income reported $XXX), (adjust cost basis XXX), (adjust gain/loss -XXX)

[GeorgeM777]

Because the milestones applicable to the CVRs were not met, the CVRs were no longer eligible for payment.  Because you received a 1099-B evidencing the CVRs and their value, albeit zero, you can enter the information into TurboTax just as it appears on your 1099-B.  You may be able to upload the 1099-B into TurboTax without having to manually enter the information.

We realize these transactions will likely not have an impact on your return; however, the fact that you received a 1099-B, a document which is also filed with the IRS, it is appropriate to include them on your return.  

[seattletom1]

Thank you.  So just confirm  I DO NOT use the supplemental values and only use the zeros recorded on the 1099-B portion.

[DianeW777]

Yes, you will use zero as the sales price since that is shown on the Form 1099-B is zero.  However, in your description you noted ordinary income:

• 'the 1099 supplemental has: (type RSU), (quantity), (date acquired), (date disposed), (proceeds 0), (ordinary income reported $XXX), (adjust cost basis XXX), (adjust gain/loss -XXX)'

You do have a cost basis for the amount that was recorded as ordinary income, which would have been reported in your W-2 wages at some point. This means you do have a cost basis for the dollars you did pay tax on even though you didn't pay additional funds out of your pocket. This also shows that you have a loss on the transaction.

[MK625]

Hi,

I am also a BMS/Celgene employee with the same situation.  Between 2019 and 2020, I have over $10,000 added to my W-2 for the CVR's.  How do I deduct this in TurboTax?  Also, I had to adjust the supplemental schedule for 2019 to match the value added to my W-2 for 2019.  Thank you

[ErnieS0]

You do not deduct the amount. Instead add the amount included in your pay. This is your cost basis at awesome Tax Expert @DianeW777 said.

You would record the sale using $0 as the sales price and the amount added to your W-2s as the cost basis.

This will give you a capital loss. You can use this to offset other capital gains and deduct up to $3,000 per year ($1,500 if married filing separate).

[MK625]

ErnieS0,

Thank you very much!  That's what I ended up doing, so this confirms what I did.

Thank you again!