TurboTax AnswerXchange Home

1099B Cost basis for RSUs?

My 1099B reflects the sale of RSUs I received from my employer.  Taxes were witheld when the shares originally vested.  If the original number of shares was 100, and I received 50 after the initial taxes were witheld, is my cost basis 100*stock value at vest?  This makes my cost basis higher than the gross proceeds reported on the 1099B.  Turbotax thinks I took a loss?
    Your basis in the entire lot (100 shares) is the same as the compensation reported on the W-2 at vesting.  The compensation is calculated at 100 x per share FMV.

    So a "same day" sale - which is a capital gain or loss event - should result in a small loss due to commissions and fees.

    Rather than use the RSU Investment Type use the regular "Stock" investment type.  Tell TurboTax you purchased the stock on the day it vested using the appropriate per share basis.  Much, Much easier.

    Tom Young
    • so your basis is going to be higher than your sale proceeds correct?  sale proceeds 50x price per share and basis 100xprice per share?
    • No, of course not.  I said your basis in the ENTIRE LOT is the same as the compensation.  If you're selling half the lot then you report half the basis.  The other half of the lot and the basis went away with the 50 shares sold or withheld for taxes.
    • Still confused,
      100 shares @ $10 will be reported on your W2, then when they vest you get 60 shares @ $12, the remaining 40 shares were used for tax.  Based on your 1099, will you only need to report the gain of $2 per share on the 60 you sold?
    • 100 sh @ $10 = $1,000 = basis in grant original grant
      (40 sh @ $10 sold or withheld for taxes = $400 = basis removed.)
       60 sh left @ $10 = $600 = basis in remaining shares.
    • The part about taking a small loss due to commissions and fees was very helpful to me. I lost 60 bucks!
    There should be two components to the transaction.  At vesting, the ordinary income from the RSUs and the taxes withheld (through the sale of the units to pay taxes) should be reflected on your W-2.  At that point, you own the shares outright.  In the example you describe, the cost basis is the net shares (50) times the FMV of the stock at the date of vesting. 
    • May I ask a follow up question?  I had two lots vest during 2012, but only sold one lot.  The 1099 reports only the sold amount, but I believe the W2 shows taxes withheld for both lots.  Should I only list the cost basis of the lot that I sold?
    • Yes.  All the "compensation" elements associated with vesting are on the W-2.  Sales subsequently create capital gain or loss.  
      Tom Young
    • Thank you for the response.  I believe I've got it.  As you mention above, the cost basis will be the number of shares sold x the FMV.  I believe I was looking at the total number of shares, including the ones that were already sold to pay taxes to determine the cost basis.  Didn't look right.
    Here is the difference in the answers from Tom Young and me.  I assumed that the RSUs were handled by what is called net issuance, and he assumed that they were handled by same day sale.  In net issuance, the employer uses shares to withhold taxes and you only receive the net shares.  In that case, my explanation is correct.  If you do a same day sale, he is correct.  The following link describes the differences and tax consequences quite clearly.

      There really is no difference between our answers.  In both answer:

      Compensation = # of shares vested x share market price at vesting date.

      Withholding associated with vesting = # of shares sold or withheld x share market price at vesting date (ignoring fees associated with sale)

      There clearly was a sale ("1099-B") and the poster was obviously applying the basis of the entire lot (100 shares) against the 50 shares sold, which is why he posted. 

      But the essence of the answers were exactly the same.

      Tom Young
        Take note, if they weren't sold the same day and held over time, other corporate actions could affect your basis. That could include anything from splits and spin-offs to mergers and split-offs. Great discussion everyone.
          I am having the same issue but maybe a little worse.  I have a 1099-B from Morgan Stanley.  None of the Boxes match up well with what Turbo Tax is displaying.  I was given my RSUs in 2009 and they vested in 2012.  I sold them all at a small loss.  Everytime I think I have entered the right data into Turbo Tax it just doubles the tax I've already had witheld by my employer.  I am using Trubo Tax Basic.  Will spending the money to upgrade just frustrate me more? Should I take that money and use it to go to a tax preparation service?  Will E-File still work?
          • If you are getting a "doubling" of tax then you obviously have not entered any basis to offset the proceeds.  Your basis in the gross lot of stock you received (i.e., the amount of the award before any stock is withheld or sold for taxes) is simply the compensation income reported for the award.  Tell TurboTax you "Purchased" the stock at the vesting date and put in a proper amount of basis for the shares sold per the 1099-B.

            Tom Young
          Contribute an answer

          People come to TurboTax AnswerXchange for help and answers—we want to let them know that we're here to listen and share our knowledge. We do that with the style and format of our responses. Here are five guidelines:

          1. Keep it conversational. When answering questions, write like you speak. Imagine you're explaining something to a trusted friend, using simple, everyday language. Avoid jargon and technical terms when possible. When no other word will do, explain technical terms in plain English.
          2. Be clear and state the answer right up front. Ask yourself what specific information the person really needs and then provide it. Stick to the topic and avoid unnecessary details. Break information down into a numbered or bulleted list and highlight the most important details in bold.
          3. Be concise. Aim for no more than two short sentences in a paragraph, and try to keep paragraphs to two lines. A wall of text can look intimidating and many won't read it, so break it up. It's okay to link to other resources for more details, but avoid giving answers that contain little more than a link.
          4. Be a good listener. When people post very general questions, take a second to try to understand what they're really looking for. Then, provide a response that guides them to the best possible outcome.
          5. Be encouraging and positive. Look for ways to eliminate uncertainty by anticipating people's concerns. Make it apparent that we really like helping them achieve positive outcomes.

          Similar questions other people found helpful: