Bonus after company acquisition is reported on 1099-B

[mgalaxy444]

I joined a start up company in 2016. The company was later acquired by another larger private company in 2018. As part of this event some original employees received a cash bonus in 2019. This bonus was reported on the form 1099-B. However, fields 1b (Date acquired) and 1e (Cost or other basis) are not filled out. This makes sense because I didn't purchase any stock. They just filled out 1c (Date sold) and 1d (Proceeds) with the date when the company acquisition happened and the amount of the cash bonus. What is the proper way to fill out this form in TurboTax? The way I see it, I have the following options for 1b (Date acquired) - start date at the company, Inherited or Various. For 1e (Cost or other basis), since I didn't purchase any stock, would I put $0? Putting start date at the company and $0 would mean I am paying long term capital gain tax on the amount. Does that sound correct? 

[RobertG]

You are correct that it should not be reported as a capital gain.

Bonuses or awards you receive for outstanding work are included in your income and should be shown on your Form W-2.

However, you can still report it on your tax return as employment wages by following the instructions below:

1. Click the Federal tab on the left side of the screen
2. Click Wages & Income 
3. Scroll down to see all income and click show more beside Less common Income
4. Click Start beside Miscellaneous Income, 1099-A, 1099-C
5. Click start beside Other income not already reported on a Form W-2 or Form 1099
6. On the next screen answer Yes to Did you receive any other wages
7. The next two screens relate to household employees. Click continue to move past them.
8. On the next screen, answer Yes to Did you earn any other wages
9. On the next screen, select Employee compensation that was not reported on a W-2. (disregard note about a 1099-misc form)
10. On the next screen, click continue to reach the screen where you will report your employer's EIN and the income you received.

As for the 1099-B, you should report it with your basis equal to your bonus, so you show no gain or loss.

This question was previously answered by KatrinaB48

[mgalaxy444]

RobertG, thank you for the response. I just wanted to clarify that the award was not for outstanding work but rather equity paid out as part of the sale of the start up company to most original employees. They paid out half of the amount through payroll and included in W2 but second half was wired and is included in 1099-B. I am confused about the purpose of the 1099-B form.

[RobertG · Accepted solution]

In that case, you should report the 1099-B as a non employee stock sale, basis would be zero.

Since it is equity paid out as part of the sale of the start up company it would be reasonable to report it as a long term capital gain.

The reason I would report it as a non employee stock is that employee stock involves basis adjustments that you would not need to make.