I hope I can explain this adequately as I don't even know what to search for. I'll be amazed, but so grateful if anyone here can help. In 2018 we received and exercised vested Incentive Stock Options upon leaving a privately held company. Unexpectedly, a month later the company was bought out by a public corporation and our private company stock was immediately sold as part of the buyout deal and we received a cash payment.
In 2018 I understood how to report this correctly (bargain element, etc.), however, the sales price per share was adjusted down by 9.75% to account for the portion of the total proceeds reserved in escrow for the lawyers/firm handling the buyout for 18-24 months. This year we received about 75% of that held back escrow amount. It was reported on a 1099-B with very little information other than total proceeds and no new Form 3921. Of course TT wants cost basis information. I have been pouring over my records and notes from the original exercise and they are (thankfully) extensive.
To simplify with numbers, the total proceeds would have been $22k without the escrow, so we received $20k in 2018. The full cost basis around $1450 was reported and gains taxed between W-2 compensation reported and then the remainder from the 1099-B. So in 2020 we receive $1500 ($500 still pending) and get the sparse 1099-B. Do I enter $0 for cost basis? Or a percentage of the $1450? I'm thinking since the full cost basis was already accounted for in 2018 and it was only the 90.25% of the total proceeds received that were reported, this portion of the 9.75% held in escrow has no additional cost basis. However, I could be totally wrong, of course.
Anyone have any ideas or experience with this?? I have further data if needed. Thank you so much!!
