Have a taxpayer who cashed in Dana Stock given to him as an employee in 2008 when the company was bought out by Metulsa. He worked for Dana and now works for Metulsa. In 2012 he cashed in the stock and has a 1099 B for the sale with no cost basis. I am able to figure value of the stock on the day it was given to him. My question is do I use cost basis of zero since he paid nothing for it. Or do I use basis of the stock on day he received it as if it was a gift? He says all employees were given same amount of stock and he has no idea why the company gave it to them. It was not for any money he had invested prior. I've never known of this to happen so not sure how to handle this. Thanks in advance for any help.
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If he was literally given the stock - no option plan, no restricted stock plan, etc. - then the company should have added the FMV to his W-2, since the stock would have been part of his compensation at that time. Thus the total basis would be the amount added to his W-2. In theory, the amount should match your FMV calculations for that day.Originally posted by Bonnie View Post -
Not sure if he will know if it was added or not back in 2008. I can ask and see what he says.Comment
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Gary is exactly right that the employer should have included the FMV of the stock to his W-2 if there were no restrictions. Having said that, you're going to produce documents that prove that otherwise the basis is zero.
The client should have payroll documents to provide this information. If he doesn't, then he should go back to Dana/Metulsa and get it from their records.Comment
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As previous responses say - refer to the W2 for the year of exercise.
We do a lot of Stock Options, and many of them take months for the client to retrieve the proper information - especially from previous employers. You may need what is referred to as an Exercise Report from the employer. Here's some things that may help sort out what the client has . . .
What kind of stock option was it? - Restricted Stock Unit (RSU), Incentive Stock Option (ISO), Non-qualified (NQ), or Employee Stock Purchase Plan (ESPP)? Those are the most common.
Here's a couple of identity features:
NQ's should have a W2 box 12 code V - however some companies are still not entering that, even though it is required!
RSU's - usually on the W2 (unless it's Apple) located in a taxable / non-taxable breakout - not required, so don't be surprised if it's not there
ESPP - employee should receive a form 3922 - might be an entry on W2 box 14 - again not required
ISO - employee should receive a form 3921 - sometimes on W2 similar to RSU's
They received a 1099-B, so we know it was sold - is there an acquisition date - many Stk Options are Same Day Sales, or held several years to qualify. You'll need the date it was exercised (sometimes called the "purchase date" or "value date") - We found many 1099-B's (2012) are now including the date & cost - NICE!
NQ's same day sales are almost always close to break even. They are taxed on the W2 income, which is part of the basis, then the "discount" is the other part of the basis.
RSU's with an 83(b) election - W2 income is the FMV on the award date
RSU's without and 83(b) election - W2 income is the FMV on the vesting date
Many RSU's are no option cost
ESPP not sold the year of exercise - NO Income in the year of exercise, and NO AMT or Payroll tax - when sold basis = option price + W2 income & is L/T Cap Gain
ESPP sold the same year - (NQ Sale) - The basis is the option price (exercise price) - reported as a capital gain - no normal income
ISO - not sold same year must be reported on 6251 (AMT) - So check the tax return for the year granted / exercised. If properly reported, basis when sold is the FMV on the option date.
MikeComment
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And on the other hand...
...maybe it had NOTHING to do with stock options!
"Any Regional President, Division General Manager, or Corporate Office Department Head of the Corporation or a Subsidiary may make an annual award of up to 1000 Shares of Stock to an Eligible Employee for an Act of Special Service...."
"Employees are not required to provide any consideration for their awards under this Plan other than their Acts of Special Service, or their efforts related to the filing of a patent application or the publication of a technical paper."
FEComment
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It was not a stock option, just stock given to every employee. They all got the same amount. I think most cashed theirs in shortly after getting it. My customer kept his from May 2008 til Mar of 2012. I've never really heard of this before. He says he doesnt' know why the company gave the stock to all employees. Not an annual award. Given to everyone when Metulsa bought out Dana.Comment
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Metalsa and Dana Corp
Years ago there was a Dana operation in a town I once lived in.Originally posted by Bonnie View Post
As best I can tell, Metalsa only bought a portion of Dana Corporation (its structural products unit). It appears that Dana Corp, or whatever is now left of it after some corporate reorganization/bankruptcy issues, STILL trades as DAN on the NYSE.
INFO: http://www.advfn.com/nyse/StockNews....ticle=40794927
You might try to contact their Investor Relations Department for some guidance??
FEComment
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