1099-B RSU question

[indexfundinvestor]

Hello and good day, everyone!

I have, hopefully, a simple question.

I had a bunch of RSUs fully vest in 2021 and I ended up selling those the next day for a small loss. I received the 1099-B from Fidelity and it shows $0 for the cost basis and a code that indicates "cost basis not provided to the IRS." (Code B I believe).  They also sent a supplemental form that shows the actual cost basis.

I am avoiding the TurboTax RSU interview as it is a pain. My question is, should I enter $0 for the cost basis to match the 1099-B and then say the cost basis is incorrect and then provide the real cost basis? Or, should I just enter the real cost basis at the beginning? I have tried it both ways and there is no difference in the tax calculation, which I expected. I just don't know the proper way to report this.

Thank you in advance!

[DavidD66 · Accepted solution]

Since the transaction is reported with Code B, it doesn't matter which way you enter in TurboTax.  Initially entering the correct cost basis is the easiest and simplest way to do it, so that is what I would do.

[indexfundinvestor]

That makes sense to me. Thank you @DavidD66 !

[neesecm]

I have a similar question.  I don't know for sure what the cost basis is.  My W2 has the amount of the RSU sale lumped into the total amount for gross pay.  I can look at my paycheck when the RSU sale happened but I don't know if that is the cost basis or adjusted cost basis.  I received a value of $10,000 but $2,800 were taken out and reported for taxes on the 1099-B in 1d.  The net I received was $7,200.  What is the cost basis I should report? 

[RaifH]

You want to report the adjusted cost basis, which is probably right around $10,000. The adjusted cost basis may be in the supplemental information with your 1099-B or in Box 14 of your W-2. If you can't find this information, TurboTax will take you through the steps to calculate it:

1. In the Federal > Income & Expenses > Investment Income section of your return, click Start/Revisit next to Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B)
2. Answer Yes and then select stocks. Import or enter your transactions manually. 
3. For the RSU transactions, make sure to select Yes to Do these sales include any employee stock?
4. Enter the transactions as they appear on the 1099-B with RSU selected as the type of investment.
5. If the basis reported on the 1099-B is not correct, you will be able to adjust it to match the supplemental information provided. 
6. If you do not have the adjusted cost basis, TurboTax will calculate it, but you must enter the total shares, the shares sold to cover taxes, the vesting date and market price on the vesting date, and the amount you paid in commissions if any. 

The $2,800 withheld for taxes as well as the $10,000 in compensation should both be reported on your W-2. For more information on RSUs and how to report them, please see this TurboTax article.

[neesecm]

Thanks for the reply,

When I put in the 10,000 as the corrected cost basis, TurboTax shows a loss of -$7,200 and then adds a "Capital Loss Carryover" of  -$4,200.  This seems strange to me.  I don't understand how this is a loss, which makes me think something isn't right.

[RaifH]

No, that doesn't seem right. Does your 1099-B only report the sale to cover the taxes or does it cover the other sale as well that went into your pocket? When you said you received $7,200, did you mean you actually received that in cash or that you still have stock that was worth $7,200 in that account?

If the only sale was the shares sold to cover taxes, then your cost basis would be determined by the report of the adjusted cost basis of all the shares * the shares sold to cover the taxes / total shares received. If the total adjusted cost basis was $10,000 and you received 100 shares, 28 of which were sold to cover taxes, then your basis for the sale would be $10,000 * 28 / 100 or $2,800. You would still have 72 shares. Their basis would be $10,0000 * 72 / 100 or $7,200.

@neesecm 

[neesecm]

I actually received $7,200 in stock.  To add more detail, I received a separate/additional paycheck with the $10,000 as gross pay in December.  The company sold $2,800 worth of stock to cover the taxes.  The $10,000 shows up on my year end total earnings statement, which also matches my gross pay on my W2.  However, they don't have any detail about the cost basis.  I'm assuming your basis for the sale is correct at $2800 and this is what I need to use for the "corrected cost basis".

Thanks for your help.