How to enter a 1099-misc received for stock sale

[ransbury1140]

I received a 1099-MISC from our company stock I sold back to them.  When I enter the 1099-misc in turbo tax there is no choice for stock sale to enter the cost basis and I get taxed on the full amount.  How to I enter this form to get taxed properly.  Thank you

[LenaH]

Usually, these types of stock transactions are reported on a 1099-B. However, if the company will not correct it, you could enter your 1099-MISC and then enter a separate line in Other Income with a negative reflecting the cost basis of the stock. The net of these two numbers will be the amount you are taxed on.

First, follow the instructions below to add your 1099-MISC:

1. Open or continue your return, if you're not already in it.
2. Search for 1099-misc and select the Jump-to link.
3. Click on Add a 1099-MISC. 
4. Enter the amounts as shown on your form. 
5. Describe the reason for this 1099-MISC.
6. Answer None of these apply on the screen Does one of these uncommon situations apply?
7. Answer No, it didn't involve work like my main job for the question Did this involve work that's like my main job?
8. Answer You got it in 2020 for the question How often did you get this income?
9. Answer No, it didn't involve an intent to earn money for the question Did this involve an intent to earn money?
10. Answer the remaining on-screen questions.
11. Your 1099-MISC will flow to Other Income.

Then, deduct the cost basis in Other Income:

1. Click on Federal on the left hand side.
2. Scroll down to Less Common Income.
3. Click Start next to Miscellaneous Income.
4. Click Start next to Other reportable income.
5. Answer Yes to Any Other Taxable Income?
6. List description as "Basis of stock sale proceeds incorrectly reported on 1099-MISC"
7. Enter the amount with a negative.

Next, preview your 1040 to ensure both the 1099-MISC and the negative stock basis are both reported in Part I, Line 8.

1. Click on Tax Tools. 
2. Click on Tools.
3. Click on View Tax Summary under Other helpful links.
4. Click on Preview my 1040.
5. Once open, use Control + F, and search Schedule 1 and look for Line 8. 

[zoheb3]

so how would this work in a situation where

- I joined a company and received 100 shares with a cost of $0.i filed form 83b the year i joined for these shares.

- I left the company and a few years later, Sold my shares back to the company for a total of $10000

- Employer issued me a 1099-MISC instead of 1099-B and has become unresponsive

- Will the steps you have outlined above lead to this amount being taxed as capital gains (which is i think is the right thing to do) ?

- When following steps for deduct the cost basis in other income.  What is the amount that i will list as negative?

Does your provided solution ensure that this amount is taxed as capital gains vs income

[PattiF]

You can report the stock sale as an investment sale even though it was incorrectly reported on a 1099-MISC. The IRS matches income and will see that the amount on the 1099-MISC has been entered in your tax return. Keep your records about the shares that you received and the sale back to the company if ever needed. The buyback will be correctly added to your tax return by reporting this as though you received a 1099-B.

To enter the information without a 1099-B:

• In TurboTax, click on Wages and Income
• Scroll down to Investment Income
• Choose Stocks, Mutual Funds, Bonds, Other, and select Start or Update
• The first screen will ask if you sold any investments during the year, answer yes
• Did you get a 1099-B or a brokerage statement for these sales? Answer No
• Tell us about the sale, Click I'll enter one sale at a time
• The drop-down boxes can be filled out with the details of the stock sale

@zoheb3 

[zoheb3]

Thank you @PattiF .  Do i also need to do positive and reversal entry of the 1099 misc?

[PattiF]

No, it is not necessary at all to enter the 1099-MISC in the return. 

Here is the same solution from another expert (IreneS) that does not mention adding and subtracting the 1099-MISC:

You can enter the sale of stock reported on a 1099-MISC using these steps:

1. Click on Federal > Wages & Income  
2. In the Investment Income section click on the Start/Revisit box next to Stocks, Mutual Funds, Bonds, Other.   
3. If you have already entered some investment sales, you will see a screen Your investment sales summary.  Click on the Add More Sales link.  
4. On the screen, OK, what type of investments did you sell?  click the Other box and then click Continue.
    
5. Continue through the screens, entering the requested information.