After reading through all the responses on how to figure out my Cost Basis, I was not sure I got this exactly right. Can you please confirm for me?
The following was imported from E*Trade:
Description: LIVERAMP HOLDINGS INC COMMON STOCK 22
Date acquired: 10/01/2019
Date sold or disposed: 03/08/2019
Type of Invest Sold: RSU
Sales category: Short-term
Cost basis: $0.00
I got this adjusted cost basis off my E*Trade Statement for the above sale, I entered this in TurboTax as my adjustment.
I calculated the cost bases as follows, this amount matched my statement as well.
Acquired FMV Rate: $49.41
Adjusted Cost Basis: $49.41*22= $1087.02
So on TurboTax Income & Wages Section, I see the total Gains/Loss Total of $182.94
Some of the initial amount of the RSU shares were sold to cover taxes at vest, and I acquired the remaining shares (22) on 10/1/18 ….. So, I am only taxed on the total Gains/Loss amount… is this correct?
This looks correct and how I've done it for years. You've already paid taxes at vest (sell shares to cover). So now you're only playing taxes on any gains that happened on the remaining shares between when they vested and you sold them ($182.94 in this case)
Other than one or the other of your dates being wrong - date acquired should be before date of sale - this all looks correct to me.
You'll enter the sale using the "Stocks, Mutual Funds, Bonds, Other" interview. No need to use the RSU "guided" interview here, you have all the information you need.
An RSU is straight income, and the vesting value is (supposed to be) rolled directly into your W2 Wages income bucket. You can verify this by looking at your pay stubs.
Usually, the company will withhold some shares for you, and put the vested value of these withheld shares in your tax buckets. These shares have not been sold, they have been withheld. This is done to protect senior management receiving way more shares than 22. My understanding of the law covering this is that the percentage withheld is uniform over all those receiving RSUs, and is a policy decided (usually) by the CFO or at minimum a VP level individual.
Now, after being vested, you decide to sell shares. Because the value of these shares being sold were rolled into your W2 income bucket already at vesting time, creating a tax obligation, the cost basis for these sold shares is the value of the shares at vesting. You will receive a 1099 for any gain you realize if the shares are sold for more than the price at vesting time. And you won't be taxed again for the value of the vesting on these sold shares.
You didn't mention that you received a 1099 from E-Trade for the entire RSU, and I believe you didn't. Because your payroll administrator already put the full value of the RSU into your Wages and Tips bucket. E-Trade never saw those withheld shares, but they do receive a report from your company on the RSU transaction which is why they knew these shares sold were from an RSU.
So it seems the shares went up a little for you from your vesting date to the sale date. Good for you. You should calculate the gain was
(sell proceeds) - (comissions) - (value at vesting day) * (number of shares sold)
Because, again, the
(value at vesting day) * (RSU shares)
was already taxed because this money was rolled into your W2 Wages and Tips bucket.
Turbo Tax used to get it wrong when the 1099 came from E-Trade. Because they didn't know it was an RSU, they would automatically put into your Schedule D a cost basis of 0, and this had to be manually adjusted to the price at vesting. TT gets it right for Schwab. We don't use E-Trade anymore so I don't know, you have to check.