We sold some short-term, non-covered RSU shares from one of our employers. Turbotax is labeling the sale as a "disqualifying disposition" and asking if the dispositon amount is reflected on our W2, which it isn't. From Googling, disqualifying dispositions normally apply to stock bought from an employer at a discount, which this is not. Our sale was RSU units that we paid taxes on when they vested six months before our sale and I've entered all the cost basis info. Turbotax error or user?
Please review that 1099-B entry and verify that you did choose Restricted Stock Units for the type of investment.
Disqualifying Disposition should not come up for a sale of RSU.
Select EDIT for that 1099-B
I've checked and reviewed my entries multiple times and they all are marked as RSU, which is why I'm puzzled. I 100% agree that they shouldn't be coming up marked as a disqualifying disposition. I've also tried leaving the cost basis blank on the page you reference and letting TurboTax calculate it, nothing seems to change anything. I've read that I can go back and undo the "employee stock" question on all of them and it should work out fine, but I've aready had to redo them all after the Etrade import issues with labeling everything as a custodian account, supposedly getting fixed by now. I'm just confused as to why Turbotax is messing up in the first place?
I did a little more digging and realized that if I let Turbotax calculate the cost basis on the RSU shares, then it's telling me that my W2 should show a dispostion for a certain amount for the cost of the shares (still makes no sense considering they are RSU). If I use the "found cost basis" entry and enter it myself, with the same numbers that Turbotax would calculate, it skips the disposition. And to clarify ever further, on the screen that showed my supposed dispostion amount, it even listed the sale as RSU, which again shouldn't happen. In my opinion, definitely a glitch with Turbotax, but they seem to not care.
My work around was to not let Turbotax calculate the cost basis. I instead selected the option for "I found the cost basis" and entered it on my own. Doing it that way, avoids the dispostion screen. And yes, just updated now and entered a dummy entry, mirroring my correct ones, and it still does it, so still broken.