WeBull Free Stock

[CMNY]

In 2021 I received some free stock from WeBull for a referral. In my 1099 Composite there was a 1099 Misc for the free stocks. In 2022 I received another batch of free stocks, but there is no 1099 Misc this year. Do I just report the trade with a zero cost basis?

[DianeW777]

it depends.  It sounds like two transactions are taking place.  

1. Free stock was received as a referral.
2. The stock was sold

For the free stock you received for your referral the income is reported as follows (a 1099-MISC may not be reported if the amount is less than $600).

Go to the Wages and Income  section of TurboTax

1. Scroll to  Less Common Income > Select  Miscellaneous Income, 1099-A, 1099-C
2. Select Other reportable Income > Enter a description (Referral) and the amount

Next if the stock was sold you enter the sales as follows:

1. Search (upper right) > type schedule d > use the Jump to... link select 
2. Select ..type it myself or you can choose to import if you have a 1099-B
3. Your cost basis is the amount you reported as income (2021 and 2022 if all stock was sold)

[CMNY]

Thanks @DianeW777 .  In the "Other Reportable Income", the amount would be the total amount received on sale of the stock.  Then in the 1099-B the cost basis and proceeds would be that same amount (essentially a net 0 trade)?

Thank you again.

[DianeW777]

No, the value of the stock when received is what is reported as 'Other Reportable Income'. 

The sale is reported as follows and the amount reported as income ('Other Reportable Income)  becomes your stock cost basis. This means you pay tax on the value of the stock received and that becomes your stock cost when you sell.

Next if the stock was sold you enter the sales as follows:

1. Search (upper right) > type schedule d > use the Jump to... link select 
2. Select ..type it myself or you can choose to import if you have a 1099-B
3. Your cost basis is the amount you reported as income (2021 and 2022 if all stock was sold)

If, at the time of the sale, there has been no increase in the value of the stock then it could be a zero gain or loss.

[daewkim]

The free 5 stocks I received from Webull show $0.0001 on Webull document and it sold by $5.25.

It does not show on 1099-MISC. How can I file these stocks?

[ErnieS0]

You may not receive a Form 1099-MISC since the stock you received was worth under $600.

Since the value of your stock is effective $0 you do not have to report the receipt of shares as income.

Only enter the sale the way Tax Expert DianeW777 said:

1. Search (upper right) > type schedule d > use the Jump to... link select
2. Select ..type it myself or you can choose to import if you have a 1099-B
3. Your cost basis is the amount you reported as income (2021 and 2022 if all stock was sold)

In your situation, your cost would be $0, so you'd have a gain of $26 ($5.25 x 5).

@daewkim