1099-B Confusion

[commonstalk]

I'm aware changes to the form in the matter of how it's reported. Mostly effecting basis, I believe. Having a tough time getting my head around this and most especially explaining to the client.

2012: Proceeds $5074, Basis $4996 Acquired 2/15, Sold in two lots 2/16 and 4/09
2013: Proceeds $3085, Basis $3077 Acquired 2/15, Sold 2/19
2014: Proceeds $2859, Basis Blank Acquired 2/15, Sold 2/18

Client said UBS gives them the choice of paying tax on the account by writing a check or redeeming funds. Obviously he's upset because there is no basis, thus giving him a gain he didn't anticipate. The securities are Noncovered for 2014. Any help in explaining would be most welcomed.

Thanks

[David1980]

So what is the basis?

It being non-covered securities doesn't mean basis is $0, it just means basis isn't reported on 1099-B. Maybe the basis is $0. But I wouldn't make that assumption just because there's no basis on the 1099-B.

[commonstalk]

No basis given

David,
I have no idea what the basis is. It's blank for 2014 and UBS reported it that way. The taxpayer called UBS and they refused to discuss, saying talk to your tax man. My research is showing changes have been happening to the way the 1099-B is being reported.

Noncovered means no basis is reported. 1099-B instructions list a variety of reasons.

I'm not at all certain if that means the basis has already been deducted from the gain.

[commonstalk]

Revised

David,

I should have said it was my thought that non-covered securities have no basis. Sorry.

Any ideas on getting that number since UBS refuses?

[David1980]

The basis isn't on the 1099-B so that doesn't help you. If the broker won't provide it ignore that too.

It wasn't all that long ago that basis wasn't reported on 1099-B. You would hope that the broker would include that information in the additional information sent with the 1099-B but it didn't always happen. Still doesn't always happen - take your taxpayer for example. The broker may not even have the basis. Accounts get transferred, companies bought by larger companies, purchase histories lost or not retained over time.

Perhaps the taxpayer still has good records of the purchase.

Here's information from publication 550 on basis: http://www.irs.gov/publications/p550...blink100010354

What I would do is find out more about the securities in question. How did the taxpayer obtain them? When? For how much? Depending on the answers you may have a basis to report that will reduce the gain.

[kathyc2]

Are the date you posted as acquired and sold all for 2014?

If so, my understanding is they must be "covered" and basis reported.

[commonstalk]

Reit

The taxpayer works for a Real Estate Investment Company. These securities are actually shares of the company she is employed by. I wonder if it may be worth seeing if they (the company) have a record of transactions throughout the years (2008-present) and have a better grasp on the basis. Or perhaps reconstruct it from the statements?

This must be happening to others in the company.

Thanks for your help. Appreciate it!

[TomJ]

It sounds like this may be restricted stock that vests over time. Each year, the shares that vest would be considered income at their vesting FMV, reported on the employee W-2. The option to pay the tax to UBS probably refers to share withholding where the broker sells enough shares to cover the withholding that's due on the vesting-related income. They then deposit the unrestricted stock in an unrestricted account where the employee can hold, sell, or transfer. They will always report basis as $0 in this situation. If it was restricted stock, the actual basis per share is the FMV vest price.

[commonstalk]

yes

Kathy,

Yes. Each day acquired and sold are for each year as you look across. I just put in 2012 and 2013 to show how it had been reported the previous two years.

So 2014 is correct.

[commonstalk]

W-2

Tom,

UBS did mention something about showing up on the W-2, but of course I'm getting this third hand. Where would it show up? And don't I still have to report the 1099-B as is on the 8949?

Thanks

[commonstalk]

correction

I see the problem with my first post. Basis is blank in 2014. Couldn't edit it perfectly but hopefully that makes more sense now.

[TomJ]

It would be included in wages and likely not broken out separately. You have to report stock sales on the 8949 of course. If the basis is not reported though because it's a non-covered transaction, then the basis is not on the 1099-B. You / the client have to determine the basis based on how and when the stock was acquired. Ask the client for the transaction history from the account. It'll probably give you more information. He/she can also ask the payroll department for more information on whether the income is included in the W-2.

[commonstalk]

: )

Thanks Tom!