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How do I figure the cost basis for RSU on 1099-B with tax withheld on W-2?

Taxpayer has a 1099-B that shows the sales price but no cost basis. 

His W-2 shows YTD earnings include RSU exercise amount

For YTD Deductions the W-2 shows the same amount as a deduction called 'Offset RSU Exercise' and also shows a deduction called 'RSU Tax Estimate' listed as a negative number.

There's one more piece of info I dug up from the tax payer's clearing house. It shows the original grant dates of the options from 2009 and their original prices (valuing about half of what they sold at in 2013)

From what I understand, the taxpayer shouldn't have a taxable gain because the tax was withheld from the W-2. Can anyone walk me through how to report this?


    Many companies will provide 1099B with basis info that will result in a small gain or loss as poolcleaner says. If they don't provide basis info, I just zero it out with a same day trade. They never amount to much.


    Working through some of these now. Pro series worksheets end up showing the code V amounts as adjustment to basis.

    Only worked through NQSO so far. I also have ESPP with disqualifying dispositions as well as RSU's.

    I should be "fully educated" in a day or so.  

    • the worksheets seem pretty accurate from what little I've used them. Very interested in your results
    • So far I've done an ESPP on another return, and the NQSO portion of this one. Accuracy seems a big plus, there is a learning curve.(Think adjusting to 8949/D at first)(Here you have to think 3921/3922)  Main downside is the detail entry, time consuming.(No idea if you could download or not into the worksheet). I've got disqualifying dispositions here, but it seems to  handle everything I've thrown at it correctly. This one also has two different brokerage 1099B's to match so even more detail than normal. I kind of wonder what the IRS computer will do with the ordinary income Code V reporting as an adjustment to basis.(Just looks weird I guess) But the numbers so far have matched perfectly and with the detail entries, it's on the order of slam dunk defensible. Add a cover page is about all you'd need to do.

      I imagine it is pretty tough, if you don't have a good base regarding investment knowledge, two worksheets and a lot of choices, to cover a variety of situations. It does light up like a Christmas tree, and will do some strange things if you don't get it right. Last year I had a couple ESPP I had to set aside. Copied the files so I could play with the return/worksheets till I got it right.
    • RE: 8949, yeah, I thought it was weird showing the W-2 income as an "adjustment" too but so far no questions from the IRS about it.

      RE: ESPP, The percentage is a key entry.  Without it the worksheet behaves strangely.  If you don't have the percentage you can usually figure it out from the spread between the FMV on grant date and the strike price.
    • I do quite a bit of NQSO, ISO, ESPP and RSUs. ISO is a bit tricky esp related to AMT. ESPP and RSU need additional info from clients and sometimes it is hard to get that. I have started to ask clients to give me their brokerage account access and promise not to sell their shares if they trust me :-)  I asked them to change their password just for my access and change back to their regular password when I am done. Yes, very tedious to fill out all the stock details but I have 99% of the time be able to tie the ord income numbers on W-2.  Yay!
      Clients have asked about downloading details from Brokers but I think that only works for regular stock - not employee stock. I don't subscribe to the download service.

    If an employee works for a company where he has been granted RSUs, when RSUs are vested, he will have RSU income in his Pay stubs/W-2.  At the same time, there will be ordinary income taxes paid for RSU in the Tax Withholding section of W-2 details. Usually there are multiple vestings so it will be stacks one on top of each other to get to the total.  A lot of times, companies provide a report called Summary of Ordinary Income related to Employee Stock, which is a very helpful document. 

    Say 100 shares vested and the market price at vesting was $10.  So the RSU income will be $1,000. At vesting, say 40 shares were sold to pay tax, he would have been left with 60 shares. The amount of tax paid on the vesting would be $400.  The cost basis now for the remaining 60 shares would be $10/share so total cost basis $600. When he sold later at $20/shares, he will have Capital Gain of $600 (Gross Sales Proceeds $1,200 - Cost Basis $600).

    If he sold the remaining 60 shares on the same day of vesting, the cost basis is still $10/share cos he paid ord income tax up to the $10/share price.

    RSU is given without a pre-determined price - it is going to use the market price at vesting.

    If you found shares with a grant price, that would be Stock Options (NQSO or ISO). Don't confuse between the types of employee stocks.

    Good luck. I know the answer is late. 

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