Trouble Reporting Stock Appreciation Rights

[msetzler]

I was granted SARs and acquired the vested shares almost 10 years ago which resulted in seeing additional compensation at the time I exercised the vested shares.   I sold those shares in 2022.   Do I report these sales as reported on my 1099B as Employee Stock or should I indicate that they are not employee stock?   If I report them as employee stock and use NQSO as the Turbo Tax option to report and use the adjusted cost basis, I all comes out as compensation with no gain.  If I report as not being NQSO, RSU, etc...  then I experience capital gain.    

What is the correct way to report the sale of these shares?   

[PatriciaV · Accepted solution]

If you know all of the amounts that need to be entered, ie: cost basis, sales proceeds, commissions, date sold, etc., then you can enter the transaction as a regular stock trade under Investment Income (1099-B).  Entering this information as a regular stock trade avoids the issues around RSUs or NQSOs. If you sold for more than the vesting amount, you'll have a capital gain.

1. Type of investment: Indicate it is a stock sale.
2. How did you receive?  Indicate purchase.
3. Acquisition date is the date the SARs vested.
4. Date sold will be on the 1099-B
5. Proceeds should come from 1099-B
6. Cost basis: amount reported to you at vesting.

[msetzler]

Thank you - this is so helpful!