1099-B sale of private company stock with 2 transactions because of escrow

[dogongulf]

Thank you @whyzcandy

[skhilko]

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@DianeW777 wrote:

Using the information provided by @TomYoung (shown below), and because the payments were received in two different tax years, then you will report a sale in each tax year.

First Payment: The full cost basis of your stock will be applied against the first payment received and reported as a sale in that tax year.

Second Payment - New Tax Year: The second payment (assuming the escrow) will be reported as selling price with zero cost basis.  

Alternative: You may qualify to use the installment sale method. See IRS Publication 537 (page 6)

• How do I report an installment sale in TurboTax?

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I'm in a similar situation this year.

• I received and reported the first payment in 2020 tax year.
• I have a new 1099-B for 2021 which reports an escrow payment with a 2020 date in 1c Date sold of disposed field.
  • The actual escrow payment was also made in 2021.

Reporting the second payment in the new tax year with 0 cost basis as suggested here makes logical sense. The problem I'm facing with that is TT does not allow me to enter the 2020 date in 1c Date sold of disposed.

@DianeW777 do you have any suggestion on how to go about that? Would entering something like 01/01/2021 be an acceptable way of handling this? I could probably attach an explanation statement with the original sale date.

[DianeW777]

Yes, you must use a 2021 sale date.  An explanation is not necessary until and unless the IRS requests additional information.  Should that occur you can send your statement of explanation at that time.