Accelerated RSUs cashed out by employer and not reported on 1099-B

[linebergeras]

Hello,

I have a situation where all of my RSUs prior to a company merger including vested/unvested all cashed out through my Etrade account, however, only the RSUs vested prior to the merger were sent out on the 1099-B which I have imported and configured the cost basis since that wasn't include on the 1099-B.  The part I'm not sure of is the accelerated unvested stocks I received cashout forced by the merger.  A set price was determined per share which made up a majority of the cash I received from all stocks. 

I've checked with my company and taxes were taken out when the unvested stocks were processed at the full tax bracket rate I'm in 22% including social security and employment taxes.  With the raise in ordinary income from these on my W2, my tax bracket is still the same.  So does that mean since the full 22% was taken out prior to cashout I don't have to report these as RSUs?  If so, I don't have the necessary documents from Etrade so how do I file them and compensate they were already taxed?   

Also the RSUs I have reported /from Etrade (vested only), the total disposition amount doesn't account for all stocks reported on my W-2 in Box 14.

[DavidD66 · Accepted solution]

The reason the non-vested RSUs were not included on the 1099-B is because of the nature of RSUs.  They are not really stock.  They are units, representing stock.  When they vest, the Company then issues you stock, but until they are vested, they are just a memo entry.  As far as you're concerned, the stock didn't really exist, as it was only a promise to give you stock at some future date.  So, when your un-vested shares were cased out, the company just paid you the set price per share promised - nothing was actually sold.  !00% of the value of the un-vested shares should have been reported on your W-2 as ordinary income.  There is no sales transaction to report to you on a 1099-B, nor for you to report on Form 8949/Schedule D.

For your vested shares, you actually owned the stock.  So they bought the stock which created a gain (or loss) on the sale.  Your cost basis in the vested shares is the value you were taxed on when they vested.

[linebergeras]

Hey David,

The answer is exactly what I'm looking for as no one from etrade or my company would give me a straight explanation.  One follow-up question in addition to the answer you gave.  For the non-vested stocks that were immediately cashed out, I'm seeing my W2 in Box 14 that contains an RSU item with a amount that equates for ALL stock my company sent to me which includes both non-vested/vested.  After enter my vested items on 8949/Schedule D, Turbo tax asks if a calculated disposition amount was reported on my W2 box 1 wages which it should be because it was treated as ordinary income but references the amount could be in Box 14 which is significantly different.  20k+ difference.   My concern is if Box 14 will cause confusion since the amounts doesn't line up or if it's just a memo item and wont effect on my tax return.    I can give an example if needed.

[DavidD66]

I'm not really sure what your follow up question is.  I can tell you that Box 14 is just a memo box.  It is information only and may or may not correspond to an entry on your tax return.  For example, I've seen where the value of RSUs included in Box 1 wages is entered in Box 14, but that amount was not entered anywhere on the tax return.