Why does it seem like my SSAR exercise is being taxed as Ordinary Income, and then the Sell-To-Cover shares being taxed a second time?

[singlemalt8]

I know there has been some great guidance on this site about SSAR's, but I am still having some trouble with the logic and wondered if someone could help check my tax scenerio...

Situation Details: I work for a Swiss company so currency in CHF (*used exchange rate to get to USD, so there are some rounding errors in the examples).

20Dec2017: Executed "Sell-To-Cover" on 318 SSAR shares at 245(CHF)/share.

Strike Price was 140.10, so gain is 104.90/share = 33,582CHF (~$33K), which resulted in 136 shares total.  The ~$33K Income is included as Ordinary Income on W2 and shows in Box14 as a note. 

This was a "Sell-to-Cover" exercise, so 45 shares were sold, resulting in $11K in proceeds, of which, $10,772 was used to pay taxes, ~$29 for Fees, and $136 paid out in cash.

Now I have a 1099-B that lists 10,913 as "proceeds" in Box 1d, Box 1e is blank, this is "Long term noncovered", and I am trying to determine the cost basis to report.  

Q1: Is it correct that I entered 10,913 as Box1d proceeds, and then adjusted the Box 1e Cost Basis to be the 10,772? 

Q2: If the entire $33K exercise was already claimed as Ordinary Income and taxed, why do I get an additional $10,772 reported as "Proceeds" on the 1099-B, and then have to report that again (seems like I am paying taxes again on the paid out cash)?

Any help appreciated!!

[TomYoung]

I never advise using any of the "employer stock" step by step interviews as many people find them confusing and frequently come up with the wrong answer.  There's no "income tax return reporting" requirements to use these step by step interviews except in one case, that being that the compensation was NOT reported on the W-2.  But that's not your issue.  In any case the ESPP step by step process would not be appropriate in your situation. 

Instead of using the employer stock step by step process I'd say simply use the TurboTax default 1099-B entry form and then use the CORRECT BASIS against the proceeds of your sale of 45 shares.  The correct per share basis is the same as the per share "fair market value" your employer used to come up with the compensation reported on the W-2 for the entire grant.

I'll admit I'm really not following your explanation of the transaction.  The use of US Dollars vs. Swiss Francs, the rounding of some numbers and the exact numbers used elsewhere just makes it hard to follow.  But I've told you what your per share basis is so:

Enter the 1099-B exactly as it reads.  Enter the appropriate cost for the stock sold.  The appropriate cost is (45 shares) x (per share FMV used by employer to calculate compensation.)

The typical "same day" sale usually results in a small loss due to selling commissions and fees, but that's not always the case.  If you per share selling price was different than the per share fair market value used by the employer then you could have a loss more than the selling fees, and you could even have a small gain, which I'm guessing is the case here.

Tom Young

[maglib]

Enter the 1099B exactly as received but, as you know, the cost basis is inaccurate as they don't consider the fact that you were already taxed at ordinary income tax rates.

So you will have to adjust the cost basis.  Enter the information reported for your sale just as it is on the 1099-B and then check the box below the transaction that says "This sale involves an employee stock plan (including ESPP) or an uncommon situation"  then click on Start now.  Continue through the interview to enter the information for the ESPP.  You should have received a statement from your employer or the broker that manages your company's plan.  You will need that information. 

This will result in your transaction being properly recorded and the income will NOT be doubled. You may even have a small loss if there were expenses for the sale as you reported above.

Do note NOT ALL employees get 1099-B's and if there is no 1099-B a code V on your w-2 suffices for reporting and you would NOT have to enter a 1099-B.... (This is for other people who may read the response, as you got a 1099-B, yours must be reported).

[singlemalt8]

Thanks for the quick response!  What is not clear to me here is, if I walk through the interview, I am not sure which "proceeds" I am reporting.  The original SSAR exercise (33K), or the SellToCover (11K).  The 1099 Proceeds (11K) seem to relate to only the SellToCover portion.  Unfortunately, I do not have the "taxes paid" on that portion separately as the W2 taxes listed were for the complete exercise (33K).

Sorry I am not getting this more quickly, but the documents I was provided are not very clear (or maybe I am just dense!).

[maglib]

the sell to cover is what should be in the 1099B,  (why do you need infor about the taxes as that would just be 11/33 of the taxes withheld).