Covered securities and supplemental forms

Forum|Forum|1 year ago
February 13, 2025
1 reply
20 views

On 1099B, the covered securities will already have adjusted cost basis reported. How come the supplemental form has a different adjusted cost basis?

How does the figures change if it was already reported initially with the 1099B?

DavidD66

Level 15

I'm not sure what you mean by "supplemental form". Forms 1099-B don't always have the correct cost basis. This happens for employer stock sales such as Restricted Stock, Non Qualified Stock Options, Employee Stock Purchase Plans. The 1099-B sometimes is accompanied by a supplemental schedule that shows the correct cost basis. In cases where the stock basis is incorrect on the 1099-B, the cost basis must be adjusted after the amount on the Form 1099-B is entered. If you don't understand what is reported on the supplemental form, I suggest you contact your broker and inquire about it.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

jyeh74Author

Level 6

What I meant by “supplemental form” is the supplemental schedule that corrects the cost basis. My question is how could the cost basis be incorrect to begin with?

ThomasM125

Level 15

Normally when the cost basis is incorrect, you are dealing with stock acquired through your company, often through an employee stock purchase plan (ESPP). In those instances, a portion of the gain on sale of the stock is reported on the W-2 form as wages. Usually the cost basis reported on the Form 1099-B will list the stock cost when acquired which does not include the discount the employee received, which is reported as wages on the W-2 form. In that instance, you need to add the discount to the cost basis on the Form 1099-B to arrive at the correct cost basis to deduct from the sale proceeds. Otherwise, you total income reported from the stock sale will be overstated.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"