You can calculate your cost basis per share in two ways: Take the original investment amount ($10,000) and divide it by the new number of shares you hold (2,000 shares) to arrive at the new per-share cost basis ($10,000/2,000 = $5).
What is the adjusted cost basis for ESPP?
For ESPP shares, the cost basis is the discounted purchase price, plus the compensatory income recognized on Form W-2. Under new IRS rules, starting in 2014, brokers who sell any ESPP shares will only be allowed to report the discounted purchase price of ESPP shares as the cost basis on Form 1099-B.
What is cost or adjusted basis on 1099-B?
The cost basis reported on Form 1099-B reflects the purchase price only and doesn’t account for income reported by your employer, due to IRS regulations. The Supplemental Information Form will show an adjusted cost basis that accounts for the income reported by your employer.
How do I adjust my 1099-B?
Select Capital gain or loss (Form 1099-B) from the expanded list. Click Add to create a new form, or click Review to review or modify a previously created form. Enter the transaction information on the proceeding screens and select the appropriate adjustment code on the screen titled Investment Sales – Adjustment Codes.
Do I need to report ESPP on my tax return?
When you sell ESPP shares, your employer reports your ESPP income as wages in box 1 of your Form W-2. ESPPs have no withholding for income tax, and Social Security and Medicare taxes do not apply.
What if the wrong cost basis is reported on my 1099-B?
If the cost basis you report is too low, then you will overpay taxes. Reported to you by your broker on IRS Form 1099-B or its equivalent substitute statement, the cost basis includes the price paid to acquire the shares and the compensation recognized for acquiring them (reported on Form W-2).
What do I do if I don’t know my stock basis?
First of all, you should really dig through all your records to try and find the brokerage statements that have your actual cost basis. Try the brokerage firm’s website to see if they have that data or call them to see if it can be provided.
How long do I have to hold ESPP shares?
one year
To get favorable long-term capital gains treatment, you have to hold the shares purchased under a Section 423 ESPP for more than one year from the purchase date and more than two years from the grant (or enrollment) date.
Can you lose money in ESPP?
Can you lose money on an ESPP? As with any stock, the value of ESPP shares can drop or go away altogether, very quickly. A 15% decline in the stock price can easily wipe out the value received for participating in the plan.
How do I report a 1099-B without a cost basis?
If the cost basis amount reported on Form 1099-B does not match your adjusted cost basis per your records, you will include adjustment code B on your tax return. Compensation income reported on Form W-2 most likely is not included in your cost basis on Form 1099-B and will require an adjustment amount using code B.
