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I received a stock grant from my company last year. I later transferred these shares into my brokerage account and later sold them. I am doing my taxes now and trying to figure out what to do to file everything correctly.

I received a 1099-B from my brokerage firm. It shows the cost basis for the shares at the price at the moment of transfer. Then the price went up and I sold the shares, making a profit. So that is taxed as short term gains.

I think I should have received a similar form from the initial company that handled the stock grant. The price at issue was higher, so there should have been a loss before there was a gain. When I contacted the company, they said they don't have a form to send me and the only tax form I would use would be the one from the stock broker.

Does anyone know how to handle this for tax purposes? I feel like the initial price at the time of the stock grant should be the one used as cost basis for profit/loss calculation. What do you think?

Thanks!

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rated:
Matematik said:   I received a stock grant from my company last year. I later transferred these shares into my brokerage account and later sold them. I am doing my taxes now and trying to figure out what to do to file everything correctly.

I received a 1099-B from my brokerage firm. It shows the cost basis for the shares at the price at the moment of transfer. Then the price went up and I sold the shares, making a profit. So that is taxed as short term gains.

I think I should have received a similar form from the initial company that handled the stock grant. The price at issue was higher, so there should have been a loss before there was a gain. When I contacted the company, they said they don't have a form to send me and the only tax form I would use would be the one from the stock broker.

Does anyone know how to handle this for tax purposes? I feel like the initial price at the time of the stock grant should be the one used as cost basis for profit/loss calculation. What do you think?

Thanks!

  
What do you mean by stock grant? Discount employee purchases (ESPP) or RSU's?

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BTW - check your W2 - your initial grant was all taxable and all that is probably reflected in your W2.

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Your basis is the FMV on the date of the grant regardless of what the 1099-B says. You just need to specify the correct basis.

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I'm assuming you didn't pay anything for these shares, they were a true restricted stock or restricted stock unit grant.

The price of the shares when granted has no bearing on anything related to your taxes.

The taxable events are:

(i) The fair market value (FMV) upon vesting or transfer of this property to you. This is ordinary income and should be in your W2 if you were an employee of the company which made the grant to you. This FMV is then your cost basis for calculation of future capital gains or losses.
(ii) capital gains or losses based on the sale price vs your basis established in item (i). Should be reported by broker on 1099-B. This looks proper as well.

You should have everything you need.

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InTrouble said:   I'm assuming you didn't pay anything for these shares, they were a true restricted stock or restricted stock unit grant.

The price of the shares when granted has no bearing on anything related to your taxes.

The taxable events are:

(i) The fair market value (FMV) upon vesting or transfer of this property to you. This is ordinary income and should be in your W2 if you were an employee of the company which made the grant to you. This FMV is then your cost basis for calculation of future capital gains or losses.
(ii) capital gains or losses based on the sale price vs your basis established in item (i). Should be reported by broker on 1099-B. This looks proper as well.

You should have everything you need.

  
Well laid out InTrouble, and an example with numbers might look like:

* Ten (10) shares valued at $50 per share at time of grant. You owe income taxes on $500 (Fed/State/etc). Cost basis for shares in $50. Your W2 should reflect this as part of your income.
* Transfer shares some time later, say valued at $43 per share to brokerage. 1099-B reflects this value (but isn't applicable, see above).
* Sold shares for $48 per share. 1099-B will reflect $50 in gains. However, you actually have $20 in short-term capital gains (losses) (10 x -$2)

Most major tax software products can readily account for this, usually something looking like 'My Cost Basis is different than on the 1099-B'. 

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jarfykk said:   
InTrouble said:   I'm assuming you didn't pay anything for these shares, they were a true restricted stock or restricted stock unit grant.

The price of the shares when granted has no bearing on anything related to your taxes.

The taxable events are:

(i) The fair market value (FMV) upon vesting or transfer of this property to you. This is ordinary income and should be in your W2 if you were an employee of the company which made the grant to you. This FMV is then your cost basis for calculation of future capital gains or losses.
(ii) capital gains or losses based on the sale price vs your basis established in item (i). Should be reported by broker on 1099-B. This looks proper as well.

You should have everything you need.

  
Well laid out InTrouble, and an example with numbers might look like:

* Ten (10) shares valued at $50 per share at time of grant. You owe income taxes on $500 (Fed/State/etc). Cost basis for shares in $50. Your W2 should reflect this as part of your income.
* Transfer shares some time later, say valued at $43 per share to brokerage. 1099-B reflects this value (but isn't applicable, see above).
* Sold shares for $48 per share. 1099-B will reflect $50 in gains. However, you actually have $20 in short-term capital gains (losses) (10 x -$2)

Most major tax software products can readily account for this, usually something looking like 'My Cost Basis is different than on the 1099-B'. 
 

  
Yup well laid out by InTrouble but your example is all kooky (in my opinion).
1. You said - you owe taxes on the grant value - but that is not true - it is on value on the vesting date.
2. And that becomes your cost basis (not affected by the date on which you do the transfer).

You should not have different amounts as $50 and $43 as you have in your example.

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Thanks, InTrouble. I misspoke- I meant vest date, not grant date.

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Thanks for all the replies. You guys are truly amazing! I will go through all the questions shortly but wanted to post a quick thank you all. I am very grateful!

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I assume you didn't make an 83b election? Also, did you pay anything for the stock?

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