Noncovered Transactions - Cost Basis not Reported to IRS - Form 8949

[Themushj]

I am not a stock expert. I just have a little from my father's passing.

One stock, apparently automatically sold some shares due to some corporate reason. I received a 1099-B.

It was disposed of the same day it was acquired. 

The proceeds were the same as the listed cost basis. 

There was no Market discount or Wash sale.

The 1099 states, "Noncovered transactions-Cost basis not reported to IRS - Form 8949, Part I, (B)

I have entered all the information in TurboTax Premier "Tell us about your xxx 1099-B"

Box B - Short term noncovered.

The dialog box, "Here's all the sales reported by xxx" and it lists the date sold and gross proceeds. 

Then a dialog box comes up, "Here's a summary of sales from this account"

Box B Short term sales with cost basis NOT reported to IRS" Net Gain/Loss =0.00

That's it. And it moves back to other income summary.

So do I need to do anything else. I didn't choose to sell this stock, the corporation did it for some reason. The cost basis on the paper is the same as the gross sales. 

I've tried to study this on the Internet. I've found this, "For tax-reporting purposes, the difference between covered and noncovered shares is this: For covered shares, we're required to report cost basis to both you and the IRS. For noncovered shares, the cost basis reporting is sent only to you. You are responsible for reporting the sale of noncovered shares."

So what am I supposed to report? Does TT Premier take care of this by what I entered? 

[DavidD66]

You need to report/enter just what is on the Form 1099-B, just as you described above.  You have all the information necessary to report the transaction.  And yes, TurboTax will take care of what you entered and report it properly on your tax return. 

[anderkin4]

this can not be a correct answer !!

if you do not determine a valid cost basis for non-covered stock you pay gain equal to total proceeds - as if you paid nothing originally.

non-covered stock is stock you purchased/was purchased prior to 2011.   

you need to find historical data to determine what the cost was for all stock (by purchase event) at the time of the transaction.  note for Employee Stock Purchase Plans that the employee gets a discount (e.g., 5%) or the purchase price is the low of beginning quarter cost vs ending quarter cost, or some other algorithm, you need to adjust the cost from the historical cost on that day.

and yes this is a significant burden on the stock holder when selling stock purchased/gifted with an acquisition date prior to jan 1 2011. 

if you don't do all this calculation, you pay a lot more in taxes 

and this gets very complicated if you are making incremental stock purchases at every pay period (e.g., 1st and 15th of month) and doing dividend reinvestment.    (in my case, 26 pay periods + 4 quarterly purchases per year from  Feb 1980 through 2010,  almost 900 entries.   

if i used the previous answer, i get taxed on long term gain of $319,590, instead of long term loss of $1256.   really big difference in Tax owed.