How do you calculate the cost basis for a RSU release?

I have a release report from my broker.  When entering the transaction into turbo tax, I am asked to enter a cost basis.  I had shares withheld to cover teh tax upon receipt.
  • TurboTax calculated a Loss and a negative cost basis for my RSU sales this year.  How is the cost basis calculated to show a negative cost basis in (e) on Form 8949?  For example 88 Shares Vested on 4/17/12 at FMV $28.595 - 35 shares withheld.  53 shares sold on 10/10/12 for $21.763.  When I enter this into TurboTax, the calculated capital loss is (-$363.19) and the Cost Basis is calculated as (-0.26).
  • By adding in a selling fee of $1.09 I could come up with your loss, and it certainly seems correct, depending on "fees".  ($21.763 - $28.595) x 53 = $-362.096.  Subtract an additional fee of $1.09 and you've got the $393.19 loss.  I'm not sure why it's being shown the way it is on the 8949, but the basis (as adjusted) and loss is correct so I wouldn't hesitate to file it as is.  I'll try and see if I can find out about the presentation on 8949 and post back if I come up with anything.

    Tom Young
  • It's clearly what I would call a non-fatal error: the presentation is wrong but the answer is correct.  I expect this will be corrected one of these days.  But having the right answer on your tax return pretty much makes you bullet proof with the IRS.

    Tom Young
  • I'm in the same situation - but TT also tells me I can't e-File because of the negative basis.
    My understanding is that I have a short term capital loss on the sale of the RSUs but, should this really prevent me from e-filing?
  • Apparently it does as the OP had the same issue.  I would suggest you simply delete the sale that you've entered using the RSU Investment Type and just use "Stock" as that's all it is, really.

    Tom Young
  • Hi Tom, To confirm, if I were to enter my vested RSU sale as "Stock" transaction, would my price paid and date purchased be the market value on the release date and the date the shares were release, respectively?  Thanks for your help.  Ben
  • Yes.  You traded your time and labor for stock, paid to you on the vesting date.

    Tom Young
  • This problem is the same as mine.  I think TT is messing up based on the total shares vested and the price at vest when there is a third digit to the right of the decimal point... For me, I had 370 shares vested at 26.825. My negative cost basis is $1.85 (370 x .005). Similar to above (.26 negative basis or 88 x .003 = .26). Looking for a TT fix!
  • I've reported the issue over in the SuperUser's lounge but haven't heard about any ETA.  As I've stated, use the "Stock" Investment Type instead of the RSU Investment Type and you can efile.

    Tom Young
  • It shows a negative cost-basis for my RSU entry. When is TT going to fix this?
  • Still waiting on a solution as well. I would rather keep things in TT straight with stock, ESPP, RSUs, etc. and not have to do the work around TomYoung suggests. This has worked just fine in past years so I would like to see Intuit fix it and get this fix released.
  • The work around of rounding the market price to 2 decimals is easy and worked great for me.  (Ex. Round $15.1595 to $15.16)
  • I kept it as RSU and rounded the market price at vesting time to 2 decimals. And that worked. No more negative cost basis.
  • All of my RSUs have only 2 digits after the decimal point. There is nothing to round. This is simply a matter of the expense costs that the broker added when selling the RSU. This created the negative cost and no amount of rounding of hare prices is going to fix this.  It needs to be fixed so that there can be consistency of share entries year to year for the various different ways that shares are acquired. This worked last year and the year before so at this point I would say that TT needs to get this fixed as the workaround is not an acceptable alternative.
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Same here, but TT gave a workaround.

http://turbotax.intuit.com/support/iq/Investment-Income/Form-8949---Negative-Cost-Basis-for-Restrict...

Workaround:

 The following steps will eliminate the negative .50 cost basis.

  • On the "Investment Sales Summary" screen (displayed above).
  • Select "Edit" for the RSU sale with a negative .50 basis
  • Continue to the "Enter Vesting (or Release) Information" Screen (displayed below)
  • Round the "Market Price on Vesting Date (Per Share)" to two decimals places. (Ex. Round 15.115 to 15.16)
  • Complete the interview for this entry.
  • After making this adjustment the negative .50 basis will be eliminated from the return.


    Cancel
    Your cost basis in the lot is the fair market value of the stock at vesting minus anything you paid for it (usually, $0); this is called the "bargain element" and is included on your W-2.  Since you sold for that same price you should end up with a small loss due to broker fees.

    Tom Young
    • It all makes sense now!!  I was getting losses and couldn't figure out why.     Thanks much!!!
    • I am bit of a novice. I am having the same issue and could not efile. I have not tried changing to "stock" yet. I will try that. But I still do not understand how Turbotax calculates Cost or other basis in form 8949. Can someone help with the following example:

      Stocks Vested: 1000
      Stock Price upon vesting: $11
      Stocks sold for tax purposes: 100
      Selling price: $10
      Brokerage fees: $50

      The Capital Loss in this case would be = 100 * ($11 - $10) + $50. So a loss of $150 will be reported in 8949, is that correct? But how is cost basis calculated in this case? I am trying to understand why it is showing up with a particular value that it is.

      Thanks !
    • You know the answer.  Your per-share basis is the stock price at vesting date, so you have a capital loss of $150 in this case.  Go over and use the "Stock" Investment Type with those numbers and that's what you'll get.

      Tom Young
    • Thanks Tom ! That helps.

      I hope that TT would fix this issue soon for others.

      Bala.
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