Help with 1099-B

[avigo45]

I get confused with this every year. I get a consolodated 1099 for stock plan transactions for my wife every year. It seems the company does something with the stocks two times a year (beginning and end).

I never remember how to file this information.

The only field with a number on the 1099 is under the 1099-B in box 1d (PROCEEDS) and box 1e (COST OR OTHER BASIS). This number is the same in both boxes. Let's say it's $1,000.

Do I need to do something with this $1,000 number?

I also received a "supplemental" document that gives me a break down of the sales (there are 4 sales but only two unique grant numbers). In this sheet, there is an adjust gain (loss) number and a cost basis number which is that loss number subtracted from the $1,000 from the 1099-B.

So my main question really, what form and what numbers/etc. do I need to file here, especially since it is showing as a loss.

Thanks. Could really use help here.

[ReneV4]

Yes. You do need to input the information from your Form 1099-B. However, use care when inputting the information because standard 1099-B forms for employee stock often lead to double taxation.

When your wife's company does something with the stock, they will usually include those shares in her W-2 wages. Therefore, because she has already paid income tax on the value, her true cost basis is higher than what the 1099-B shows. That Supplemental Form is important because it contains the adjusted cost basis. 

To find out if your Form 1099-B includes ESPP, RSU, RS, NQSO, ISO, you usually need a package of four things, not just your 1099-B:

1. Form 1099-B: Shows what you sold it for (Proceeds)
2. The Supplemental Account Statement lists the Adjusted Cost Basis, which includes the income already reported on your W-2
3. Your W-2 (Box 12 or 14): This confirms the income was already taxed as wages
4. Form 3921 for ISO (if applicable), provided by your employer

What to look for on your W-2:

• RSUs/RS: Look at Box 14. Many employers will label it "RSU" or "Vested Stock." This amount is already included in your Box 1 "Wages," so if you don't adjust your 1099-B basis, you pay tax on that amount twice.
• NQSO (Non-Qualified Options): Look at Box 12 for Code V. This tells you the profit at exercise that is already in your wages.
• ESPP: This is the trickiest because it doesn't always have a specific code. You often have to look at your final paystub of the year or a Form 3922 provided by your employer.
• ISO: Form 3921 provided by your employer

It is very important that you determine the basis on your own using the above statements, rather than only relying on your Form 1099-B, because it does not have the complete story and you may end up paying more taxes than you should otherwise.

When inputting your Form 1099-B, TurboTax will have specific questions pertaining to your employee stock. Be sure to carefully read each question as you go.

You will need your Supplemental Form, but first, enter the information from the Form 1099-B exactly as it appears on the document. 

1. Click on Income
2. Scroll down to Investments and Savings and click down arrow
3. Select Stock, Crypto...(1099-B...)
4. Select Add investments, then Enter a different way
5. Select Stock, Bonds, Mutual Funds (1099-B), Continue
6. Enter brokerage information, then Continue
7. In the "Tell us about the sales..." section, then Continue
8. In the "Now choose how to enter your sales", select one at at time (since you don't have a lot), then Continue

Note: using your Supplemental Form's information, check the box just below the sales section that reads, "I need to adjust my total cost basis". It is here that you will adjust the numbers on your Form 1099-B to accurately reflect the supplementary information.

Regarding the forms you will need to file, TurboTax will generate the required Schedule D and Form 8949 once you have completed your entries.