SARs Reporting Sale

Forum|Forum|4 years ago
February 23, 2022
2 replies
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I work for a European based employer, and we are issued SARs that vest on a yearly basis. Typically, I sell within the year they vest. This year, I exercised each vested option and sold them above the strike price they were issued at. All the normal US payroll taxes were taken out at the time of the sale, leaving me with roughly 2/3 proceeds remaining in my brokerage account.

I was issued a 1099, but its values are mostly empty, except the proceeds section, which shows the pre-tax proceeds. I don’t want to be taxed again on the same proceeds, so how do I report what has already been taxed? Do I even need to report these sales? If so, I don’t see a “SAR” section of the 1099 entry on TurboTax online. Thanks!

ThomasM125

Level 15

If you received a form 1099-B reporting the investment sale, you report it in the Investment Income section in TurboTax, and then Stocks, Mutual Funds, Bonds, Other. Work through the section to enter the information from your 1099-B and when you come to the screen that says Select and less common adjustments that apply choose the The cost basis on my statement is incorrect option and enter your corrected cost basis, which is normally the income reported on your W-2 form from the investment as income in box 1.

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wilthethril11Author

Level 2

Thanks, @ThomasM125 . I have a SAR value on my W-2 in Box 14, but nothing in the Box 1 breakdown, so am I to assume the value in Box 14 was included in my gross pay for Box 1? (It seems like it was, based on the number). To me, that makes me think the SAR income has already been factored in as ordinary income and taxed (as the transaction statement from the broker shows.) I suppose I can still follow your instructions and calculate a cost basis by calculating what the total value of the award was when it was issued, versus what it appreciated to when I sold. But, I still think I am paying taxes twice on those gains, since the sale was fully taxed by the broker at the time of sale, not vest.

Here's an example of the broker's transaction statement for one of the sales, it looks fully taxed at the time of sale:

DianeW777

Level 15

Yes, the income has already been factored into your wages which is why you have a cost basis. You will not see the breakdown for Box 1 per se, however your W2 does provide information in Box 14, your pay stubs may also show a breakdown or the statement is used to provide it without an additional entry on the pay stubs.

Adding the award to your wages eliminate double taxation because you have a cost basis to use against the sales price. The only income on the return from the sale will be the appreciated value on the date of sale.. You should calculate the basis at the time of the award based on the fair market value on that day (which is also the amount included in your wages and, if applicable, any amount you paid at the time. In this situation you may not have paid anything on the date of the award which is also common.

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cgong123

Level 2

Same situation with S-SAR exersale from same Swiss company.

I entered the 1099-B info into TurboTax Premier and checked the "Allow me to continue with incomplete info" because the 1099-B does not give a cost-basis. I selected NQSO as the option type. However, TurboTax gives a Total Proceeds Summary screen with an incorrect calculation of the Selling Price per Share that I cannot change (it takes the Total Proceeds from the 1099-B and divides it by the number of shares). This causes a small loss amount which is not real.

I don't see any option to adjust the Cost Basis. Am I looking down the wrong path?