Guidance entering 1099-B for the sale of RSU's

[UserGK]

My employer went from public to private in 2021. I had vested RSU’s and unvested RSU’s. The unvested RSU’s were accelerated 100% and paid out in 2021.

I have received the following from either my employer, or the financial institution that my employer used to liquidate the shares…
W-2
1099- DIV (regarding special dividend amount received)
1099-DIV (w/ capital gains and Section 199A info)
1099-B (from the financial/brokerage institution regarding the previously vested shares)
“RSU Transaction Summary” (for the previously outstanding unvested RSU’s that were accelerated 100%)
“Managed Shares Transaction Summary” (from the financial institution for the vested RSU’s) w/ details…
Award Date (same exact date for each year)
Settlement Date (Year 1, Year 2, Year 3, Year 4)
Shares
Cost Basis
Stock Proceeds($/share)
Special Dividends ($/share)
Total per Grant/Lot ($/share)

My Questions...

1) I am confused by some of the verbiage used in the transaction summaries from my employer. Is an LTIP (Long-Term Incentive Plan) a general term that is used to describe a company policy, or are there tax implications that affect how I enter my RSU's? 

2) Turbo Tax is asking for the name of bank or brokerage on my 1099-B, but the division of my employer that awarded the shares is included in the name along with the name of the financial institution. Just an FYI if relevant, this division of my employer does not match what is my W-2--as they are under a different LLC, not an INC. PAYER’S name listed on 1099-B is listed in this format...

(Fake Name Here INC) c/o (fake financial institution name here)

Should I enter the financial institutions name only, or exactly as listed under PAYER’S name?

3) If cost basis for each year was provided on my transaction summary, do I even need to answer “Yes” to “Was this a sale of employee stock” that is asked later on in the interview process? If I choose “Yes”, then it seems to prompt further interview questions to reach cost basis. If I answer the additional questions to the best of knowledge, and with the information that was provided in the transaction summaries, I seem to get back a little more on my refund estimate. I would rather do it correctly than get back more money, but I am not sure which path is correct. TurboTax guidance reads that if it is not an ESPP or ISO, that I can answer no and avoid the further interview questions that answering yes generates. Please advise.

4) Regarding 1099-B Box 1b -Date Acquired
Box 1b is blank on my 1009-B, should I use the “Award Date” listed on my transaction summary for the acquired date?

5a) Regarding 1099-B Box 1e – Cost Basis calculation questions…
If I take the number of Awarded Shares for Year 1 and multiply by the Cost Basis given for that same year on my transaction summary, will that be my cost basis for year 1? If so, I assume that I calculate each year accordingly, and then add each year’s result together to get my total Cost Basis entry for box 1e. Is that correct?

5b)…or, should I let leave it blank and let Turbo Tax figure it out later in the interview process when it asks “Was this a sale of employee stock?” The problem is that I am not sure if I am parsing out the information on my transaction summary correctly, or if I am even understanding what TurboTax is asking for during this portion of the interview process. The fact that I get a slightly bigger refund when going this route makes me suspect that I am doing something wrong, and should just stick to the cost basis already provided. 

If applicable, please indicate the number associated with the question that you are answering. It makes reading your answers less confusing.

Thank you in advance for any help provided! It is very much appreciated.

[GeorgeM777]

Question 1 - Yes, the term "Long Term Incentive Plan" appears to be how your company described its plan for its employees.  The specific name of the plan will not affect any capital gain/loss or cost information that you need to enter into TurboTax.

Question 2 - Yes, you can enter the name of the financial institution that effected the sales of the RSUs.  If space permits, you could enter both the name of the financial institution and the name of your company (you could abbreviate both names as well).  As long as you understand the entry, it does not matter how you identify the entity that sold your RSUs.  Perhaps the name of the financial institution is the better option.

Question 3 - Because it appears that you were awarded RSUs which you later sold, then it is appropriate to respond with a "yes" when asked whether the stock you sold was employer stock.  RSUs are a form of compensation awarded to employees.  RSUs are typically issued by public companies, and therefore, the RSUs are a form of employer stock.  TurboTax will ask additional questions regarding your RSUs to better understand whether you have a gain or a loss, and your basis (i.e., cost).  Do not skip over this section even if you believe your refund amount is greater when answering all of the questions in this section.   Your goal is to prepare an accurate tax return,  paying no more tax or no less tax that is due.

Question 4 - If the award date is the same as the vesting date, then yes, use the award date.  Essentially, the date you want to use is the date the shares were awarded to you such that there were no restrictions on the RSUs.  In other words, you could sell them or hold them because the RSUs had vested with you. 

Question 5a - Yes, that appears correct.  You can provide additional information about your cost basis if appropriate; however multiplying the number of shares by the RSU price on the date the RSUs vested with you is the way to determine your basis.  RSUs are considered part of your wages, so they're also already included in Box 1 of your W-2, which reports your wages.  

The value of RSUs is typically recorded in Box 14 of the W-2, which is labeled "Other."  Box 14 doesn't have a standard list of codes, thus allowing employers to enter any description they like. You might see the value of your vested stock followed by "RSU."

Here is an example, suppose you have $234,567 reported in Box 1 as wages and $12,345 reported in Box 14 labeled as RSUs. The $12,345 has been included already in the $234,567 amount, so you don't have to add the RSUs in Box 14 to your wages when you file your taxes.

Question 5b - No, TurboTax will not be able to determine your cost basis.  You need to enter that information into TurboTax in the appropriate section.  

Follow-up with additional information if necessary as you work your way through the section that concerns your RSUs.  Additionally, here is a link to a TurboTax article that addresses RSUs which you might find helpful.

How to Report RSUs on Your Tax Return

@UserGK

[UserGK]

I really appreciate your response. Out of respect for your time, I am going to submit my follow up questions one at a time.

Question 4 follow-up:

Additional information: I have four individual award dates listed, all awarded on the same date of 03/01/14. Their individual vesting dates (listed as "settlement dates") are 03/10/2015, 03/10/2016, 03/10/2017, and 03/10/2018. My 1099-B has only one transaction for the sale, not four. The transaction summary provided by my employer has them broken down for each year. I am not sure if it is important or not, but my company withheld stock to pay for the tax. I also checked my w-2, and there is no entry in Box 14-Other.

With that information in mind, should I enter "various" in box 1b? OR... should I enter each of them in as separate sales? In other words, should I enter the first year only (from the employer provided transaction summary) as sale 1, then "Add" a second sale (and so on) after I complete the entry of the first sale?   I am confused because I only have ONE entry for each of the following boxes:

• Box-1c (Date Sold) - shows sale date.
• Box-1a (No. of Shares) shows the total amount of shares sold.
• Box-1b (Date Acquired) is blank.
• Box-1d,6** (**indicates they are net proceeds) shows the total amount of proceeds.
• Box 5 reads "Non-Covered Securities-Code X (unknown Holding Period)".

Thank you in advance, and my apologies if I am being dense. I am just trying to understand and apply your answers to the questions being asked by TurboTax.

EDITED: for clarity (I hope)

[MarilynG1]

Since your 1099-B has all the info for you, you could enter the latest vesting date of 3/10/18 as 'date purchased'' and make one entry. This makes the sale reported as Long-Term gains/loss for you. 

The X in Box 5 means the broker doesn't know the purchase date, and you want to be able to indicate 'Long Term' for your sale. 

It could be problematic entering four separate sales, not only because it doesn't match the 1099-B but because some shares were sold for taxes. The total shares of the four lots won't match the total shares sold on the 1099-B and you probably don't know which lots had shares sold for taxes. If you do have that information, you could enter each lot as a separate sale.

If the four lots had different Cost Basis amounts, you can compute an 'average' to enter as Cost Basis, since your 1099-B probably has $0 as Cost Basis.  If it does actually have a Cost Basis, great! 

Remember, the cost basis is the Fair Market Value on the date the RSUs vest. 

The most important things about reporting a stock sale are the 'date purchased' (for the long/short determination), and the correct Cost Basis (so you don't over-report your income on the sale).

Here's more discussion on RSU Sales.