I received free stock (from T-Mobile as a "customer gift") However, the cost-basis is not $0 (it shows the price that T-mobile Paid). Should I correct the cost basis?

[stormrunner11]

T-Mobile Stock

Proceeds: $121.48

Cost Basis: $91.57

Loss/Gain: $29.91

However, I did not pay $91.57 for the 2 shares. It was given to me by T-Mobile as a customer gift loyalty program. Should I correct the cost-basis to be $0?

[jtax]

Did you get a 1099-B? Did you import the transaction? What box is Form 8949 is checked?

[stormrunner11]

I received a 1099-B (Box A). I did not import the transaction. The cost basis reported to IRS was $91.57 but I did not pay that amount. I paid $0.

[jtax]

It appears the t-mobile has suggested that your basis is their cost to quire your shares, though they do not say this is 100% certain. I think this is because they are treating the cost of aquiring the shares as a discount on your mobile service. Therefore your mobile service cost less and the amount less was spent (for you by T-Mobile) on the share(s) of stock.

Given that and the small amount I would suggest not adjusting. That is not 100% certain to be right.

[This assumes these are not shares for referrals. Those would seem to create income when received and have a basis of that income recognized.]

We anticipate that your adjusted tax basis in your Shares will most likely equal the purchase price (calculated using the method described under the heading “Price of Shares” in this prospectus supplement) paid to acquire those Shares in the open market for delivery to you.

https://www.reddit.com/r/tmobile/comments/5mju78/tmus_loyal3_stock_rewards_taxes/

[stormrunner11]

I just noticed that if I adjust the cost-basis to $0 (increasing my short-term capital income) - it will actually benefit me by increasing my eligible Retirement Savings Credit (my federal taxes are unaffected). Is there any harm in correcting the basis to be $0, just to be safe?

[stormrunner11]

Also - thank you for the very detailed explanation 🙂

[jtax]

You're welcome. I don't think you can report an incorrect basis. Whether or not helps you is not the issue. You are signing the return saying it is accurate. If you know it is not accurate that is filing a false return.There is some debate about whether or not one is required to take a deduction and there have been some tricky court cases about basis overstatements, but I wouldn't suggest knowingly reporting a false number.