2022 free stocks promotion

[bchu3]

In December 2022, I participated in Webull's free stocks promotion. I received free stocks with a total approximate worth of $40 by the end of December 31, 2022. I received zero interest and zero dividends from my free stocks by the end of December 31, 2022. As of today, I have not sold any of my free stocks. I never received a 2022 1099 MISC tax form via email or shown in my Webull online account. I already e-filed my 2022 federal and state tax returns with the TurboTax website. I am unsure if I should report my free stocks worth $40. I did not include it in my already e-filed 2022 federal and state tax returns with the TurboTax website.

Do I need to amend my 2022 federal and state tax returns?

Is the 2022 1099 MISC tax form the correct tax form to report the total approximate worth of $40 of free stocks I received from Webull?

Should I report the total approximate worth of $40 of free stocks on a 2022 1099 MISC tax form even though I did not receive a 2022 1099 MISC tax form from Webull?

Please answer all my questions soon.

[KristinaK · Accepted solution]

Form 1099-MISC would have been issued to you if the value of the "award" was at least $600. This way, no form required. 

All income must be reported on your federal and state tax returns. This type of income is considered Other Income. My suggestion is to run a "mock" amend return in TurboTax and see if entering the amount affects your bottom line. If yes, continue with filing your amended returns. If not, there is no need to file them. 

Remember, whatever you report as income on your return will be your basis in the stock. When the stock is sold, use that to report cost/basis. If you are not reporting this amount as income, then your basis is zero. 

How do I cancel or undo my amended return?

Where do I enter 1099-MISC? (the steps are pretty much the same to report this income without the form). 
 

[Opus 17]

Yes, free stuff as a reward for doing something is taxable "other income."  You should report the income using the fair market value of the stock on the date it was awarded.

Keep records, because the amount you declare as taxable income becomes the basis of your stock and determines future taxable income.  For example, if you sell the stock for $50, you have a $10 taxable gain (difference between basis and selling price).  The entire $50 proceeds are not taxable when you sell, just the gain.