1099-B sale of private company stock with 2 transactions because of escrow

[SelfieTaxie]

How is this situation handled?

Employee had ISO stock that was purchased years earlier. Company was bought and stock had to be sold.

When the sale happened, a small percentage had to be held in escrow during the sales / transfer process.

Therefore now on the 1099-B there are 2 line transactions. the CUSIP's are different (one ends in COM for common and the other ESCW for escrow). Each line is showing a proceed and different dates. However has the escrow was holding say 3% of overall funds, the form is showing the same number of shares for both lines, effecting doubling this for the total. 

the sale dates for each is different and relatively close, i.e. 4 months apart in the same year of course.

these were uncovered. no tax was withheld and cost basis is not listed (but documented in other paperwork, so easily known).

So in entering the 1099-B stock sale, I am only seeing to enter both lines of the sale. So the first line is easy as that's what I am detailing each purchase date and cost for. But the second line, for the small escrowed sale … what to do? that ESCW cuisp had no cost, maybe an acquisition date of the main sale... and now the stock count is doubled ! 

any advice on this? thanks !

[SelfieTaxie]

Upon looking more around in that area, I am going to report it as a summary and then submit the suggested and requested additional info (1099-B and spreadsheet) that will give better details on the overall transaction. This was a box e, long term uncovered. Too bad the 1099-b form had not been better to give this info as I was always shaking my head to figure out why a box was left off the form, until I figured the "box" could be figured out from info on the form.

[TomYoung]

"Upon looking more around in that area, I am going to report it as a summary and then submit the suggested and requested additional info (1099-B and spreadsheet) that will give better details on the overall transaction."

I really don't think that's at all necessary and I'd approach it differently.

First, when there's an actual "escrow" amount involved in a stock sale the IRS's guidance is that you include that escrowed amount as part of your proceeds in the year of the sale.  Although the 1099-B made some distinction between "initial proceeds" and "escrowed proceeds", you don't really have two separate transactions, you have one sale with a small amount of time between the receipt of the money.

I'd simply report one sale using the first date, combine the two proceeds amounts, and enter the correct basis for your sale.  The IRS's "matching" program, as far as I know, doesn't get down into the weeds and try to match each and every line that shows up on a 1099-B to a line you've entered on your Form 8949.   If you report one sale that shows total proceeds that's the same as reported on the 1099-B from the broker I don't anticipate any issues arising on the IRS's end.  The two different dates are irrelevant as far as your holding period is concerned and, more importantly, your obligation as a tax payer is to report your income properly and if you do that the IRS's really can't lay a glove on you.

[SelfieTaxie]

thanks for the reply. 

I am going to run through entering it in again as a test and see how it goes. Seems that I think I will approach it as you mentioned.

[SelfieTaxie]

I guess that what you are recommending is still a "I'll enter a summary for each sales category" in the software versus "I'll enter one sale at a time". Seems one sale at a time may be for when you have complete info on the 1099-B.

[TomYoung]

"I guess that what you are recommending is still a "I'll enter a summary for each sales category" in the software versus "I'll enter one sale at a time". Seems one sale at a time may be for when you have complete info on the 1099-B."

NO.  The "summary for each sales category" process is designed, basically, for day traders that thousands of trades.  That's not your situation.  You have ONE sale of stock to report here.  Report it as such.

[pdicorpo]

@TomYoung I'm currently in this situation, and I already filed my 2018 taxes which did not include the escrow amount in the stock sale.  I have a 1099-B that I'm trying to report through TurboTax for the first escrow payment in 2019, but TurboTax will not let me enter a Box 1c date that is in 2018 (which is how it appears on this 2019 1099-B).

Any suggestions on what I should do?

[JamesG1]

Do I understand correctly?

You have a 2019 1099-B which you are trying to input into a 2019 tax return but box 1c of the 1099-B has a 2018 date?

[UnframedPerfected]

This is 100% the situation that I am in.  The transaction was handled by a company called SRS Acquiom (https://www.srsacquiom.com/).  Frankly put, the entire handling of the sale has been a nightmare.

[JamesG1]

Is the 2018 date in box 1c of the 1099-B also part one of a two part transaction?  Is the 2018 date the 'escrow' portion of the transaction? 

If this is the case, the transaction may be merged into one 1099-B entry as outlined above.  At this point, I am not sure whether the sale date was in 2018 or 2019.

[Confused56]

Hi! I have a similar situation. I just wanted to clarify what your suggestions were. I have 15 shares of one company listed twice on my 1099B, once as Shire shares and once as Shire escrow, both have different cusips. I think I understood you to say that I would just combine them and list as one transaction. So, for example:

On 1099B, both of these are listed for same stock:

Shire Shares Cusip 1

   1SH, Date Sold (1b): 1/10/19, Proceeds (1d): $186.10, Cost Basis (1e): $160.10, G/L: $26.00

Shire Escrow Cusip 2

   1SH, Date Sold: 1/22/19, Proceeds: $90.99, Cost Basis: $0.01, G/L: $90.98

So, I would combine them as follows????

Shire Shares Cusip 1

    1SH, Date Sold: 1/10/19, Proceeds: $277.09, Cost Basis: $160.11, G/L: $116.98 - Would this be the correct way to enter it into Turbotax?? Thanks for any help that you can give.

[dogongulf]

I have the same issue except the sale distribution and the escrow distribution are in different tax years. Any suggestions?

[DianeW777]

Using the information provided by @TomYoung (shown below), and because the payments were received in two different tax years, then you will report a sale in each tax year.

First Payment: The full cost basis of your stock will be applied against the first payment received and reported as a sale in that tax year.

Second Payment - New Tax Year: The second payment (assuming the escrow) will be reported as selling price with zero cost basis.  

Alternative: You may qualify to use the installment sale method. See IRS Publication 537 (page 6)

• How do I report an installment sale in TurboTax?

First, when there's an actual "escrow" amount involved in a stock sale the IRS's guidance is that you include that escrowed amount as part of your proceeds in the year of the sale.  Although the 1099-B made some distinction between "initial proceeds" and "escrowed proceeds", you don't really have two separate transactions, you have one sale with a small amount of time between the receipt of the money.

[whyzcandy]

I have a similar situation here. The merger happened the year before, and I reported the Incentive Stock Options sales last year. Last year, I had another payment for escrow.

Where and how should I report this?

The form I receive is 1099-B. But the form also says "This statement is a form 1098 OMB ...OR A FORM 1099-DIV OMB...". 

[DianeW777]

Because the payments were received in two different tax years, then you will report a sale in each tax year. It's normal to have a combined statement with information only on one section such as your 1099-B.

First Payment: The full cost basis of your stock was likely applied against the first payment received and reported as a sale in that tax year.

Second Payment - New Tax Year: The second payment (assuming the escrow) will be reported as selling price with zero cost basis.  

First, when there's an actual "escrow" amount involved in a stock sale the IRS's guidance is that you include that escrowed amount as part of your proceeds in the year of the sale.  

• In TurboTax Online or Desktop you will enter as a Stock, Mutual Funds, Bonds, Other, under Investment Income
• Select 1099B and then choose 'I'll enter it myself'.

@whyzcandy