I got free stocks through Webull's promotion

[DaveF1006]

In following ColeenD3 thread listed above, report this in the manner that she suggests. Enter this as an intent not to earn money.

[tinydance9454]

This is so helpful, thank you. I have the exact same situation. Should I delete the 1099-MISC after completing these steps? If I don't, it is still prompting me to fill out a Schedule C.

[DianeW777]

It depends, not if this is the only place you entered the income. The reason maybe the answer to some of the questions. It's very important that you select 'No to the intent to earn money question. If you continue to have this issue, you can enter the income in another way and delete the Form 1099-MISC. Reporting the income on the tax return is the important issue.

Alternate method:

Please follow the instructions below to report Other Income:

1. Click Federal Taxes -> Wages & Income and scroll down to Less Common Income
2. Go to the last selection, Miscellaneous Income and click Start
3. Go to the last option, Other reportable income and click Start
4. When it asks, "Any other reportable income?" > yes and then type in a description and the amount to report it on your tax return.
5. TurboTax Online and TurboTax CD/Download will use the same procedure

@tinydance9454

[Diane3]

I also received 4 free stocks from Webull, which is reported as misc. other income. I sold these 4 and their 1099-B bases show 0. Wouldn't that be paying tax on it twice? Should I adjust the bases?

[Diane3]

I also received 4 free stocks from Webull, which is reported as misc. other income. I sold these 4 and their 1099-B bases show 0. Wouldn't that be paying tax on it twice? Should I adjust the bases?

[DMarkM1]

Yes.  If the value of the 4 stocks is listed as income on your 1099 then it is counted as income and taxable.  Therefore you would adjust your basis when entering the 1099-B for these stocks to match the income shown for the stocks.

In the "Investments" topic "Edit" or "Add" the sale.  Select the box for "Incorrect or missing cost basis."  Select "None apply" and on the next screen you can enter the cost basis you have. 

Be sure to keep a record of how you derived that cost basis.

[Anonymous]

Hi Kathryn - I did not sell the free Webull stocks, yet I also got the 1099-MISC for $8.44 & $3.33 - a total of $11.77 (pasted below).  Not sure what to do - please help!  Thank you!

MISCELLANEOUS INFORMATION 2021 Form 1099-MISC* OMB No. 154*-0***

2- Royalties 0.00

3- Other Income 11.77

4- Federal Income Tax Withheld 0.00

8- Substitute Payments in Lieu of Dividends or Interest 0.00

[FangxiaL]

Report the 1099-MISC income as other income, keep it in your record, when you sell the shares in the future, use it to adjust the cost basis.

To report the 1099-Misc form as other income:

1. Open or continue with the return
2. Click on Show more next to Other Common Income under the Income & Expenses section
3. Click on Start/Revisit next to Form 1099-MISC 
4. Enter the information from the 1099-MISC form.

@Anonymous

[Anonymous]

Appreciate the response, but it's asking me for a description.  I entered "Free Stocks" and then it's asked "if it involved my main job" and then "did it involve the intent to earn money"?  Then a bunch of other questions.  This seems problematic.  Wish I didn't take this stupid promotion from WEBULL for a couple of cheap stocks.

[A276845X]

Sorry for the bonehead question, but how is it that receiving 4 free stocks from WeBull and selling them (I did that also) would be paying tax on it twice since the basis is in fact $0??.

Diane3 said: "Wouldn't that be paying tax on it twice? Should I adjust the bases?"   

[JamesG1]

Perhaps report the $11.77 on the 1099-MISC here to avoid the self-employment questions:

Federal / Wages & Income / Your income / Less common income / Miscellaneous income

@Anonymous

[Diane3]

It wouldn't be paying tax on it twice if that were the only place reported, but since the broker also reported it as income on 1099-MISC, then it would be paying on it twice if you don't adjust the basis from 0 to whatever that amount was.

[A276845X]

Thanks for the reply Diane3, here are the numbers I see on my 1099 composite:

Received 7 free Stocks worth $58.49 reported on 1099-Misc

Sold the 7 Stocks for $64.26 reported gain of $5.77 on 1099-B

Is this not correct in my case, no basis adjustment needed, or am I missing something? Thanks!

[Diane3]

If the total bases of the 7 stocks on your 1099-B is $57.49, then no adjustments needed, which sounds like the case according to your proceeds and gain.  If the basis showed $0 for each, like mine did, then you would need to adjust each of those bases.

[A276845X]

Thank you! It looks like I'm good then. I wonder how they screwed yours up? :(