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ESPP: Can I enter adjusted cost basis in box 1e (cost basis)?

Forum|Forum|6 years ago
June 1, 2019
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My brokerage (Fidelity) tells me the adjusted cost basis of my ESPP stock sales. Can I just put the adjusted cost basis in box 1e (cost basis)? See attachment for the screenshot.

I sold all stocks within a year anyway, so they are taxed at ordinary income tax rate, right? There should be no difference if I put the adjusted cost basis in box 1e?

TurboTax Self Employed Online

Best answer by TomYoung

Ultimately you're going to report the adjusted cost basis when you report the sale. The "correct" way of doing this is to enter the 1099-B as it reads on the default TurboTax 1099-B entry form but then click on the "I'll enter additional info on my own " blue button. On the next page enter the correct basis in the "Corrected cost basis" box. The correct basis is (number of shares sold) x (correct per share basis, which includes the compensation per share)

TurboTax will report the sale on Form 8949 "as reported by the broker" but will put an adjustment figure into column (g) of the Form, a code "B" into column (f) of the Form, and the correct amount of gain or loss which includes the adjustment.

But as a practical matter simply entering the correct basis right in Box 1e would also work. If you report you taxable income correctly the IRS just doesn't have any leverage over you due to "style."

Tom Young

NOTE: TURBOTAX CHANGES THE SECURITY SALES INTERVIEW JUST ABOUT EVERY SINGLE YEAR. THE INSTRUCTIONS ON "HOW TO FIX" THE BASIS REFLECT THE STATE OF THE INTERVIEW FOR TAX YEARS 2016 AND 2017

T

TomYoungAnswer

Ultimately you're going to report the adjusted cost basis when you report the sale. The "correct" way of doing this is to enter the 1099-B as it reads on the default TurboTax 1099-B entry form but then click on the "I'll enter additional info on my own " blue button. On the next page enter the correct basis in the "Corrected cost basis" box. The correct basis is (number of shares sold) x (correct per share basis, which includes the compensation per share)

TurboTax will report the sale on Form 8949 "as reported by the broker" but will put an adjustment figure into column (g) of the Form, a code "B" into column (f) of the Form, and the correct amount of gain or loss which includes the adjustment.

But as a practical matter simply entering the correct basis right in Box 1e would also work. If you report you taxable income correctly the IRS just doesn't have any leverage over you due to "style."

Tom Young

NOTE: TURBOTAX CHANGES THE SECURITY SALES INTERVIEW JUST ABOUT EVERY SINGLE YEAR. THE INSTRUCTIONS ON "HOW TO FIX" THE BASIS REFLECT THE STATE OF THE INTERVIEW FOR TAX YEARS 2016 AND 2017

M

MarkW1

Hi - I am still confused on the ESPP cost basis.

Here is an example:

I acquired 278 shares at $11.93 per share. This was an acquired cost of $3317

I then sold the shares 2 years later at $22.97 for a proceed of $6386

My employer reported income gain of $585 on my W2

In turbo tax (box 1e) do I enter my cost basis as $3317 (what I actually paid) or $3906 (adjusted cost basis)?

ie Do I enter the higher number as the compensation gain was already included in my W2?

Thanks

P

PLV

If you have no issues with the final review, you can leave the adjusted cost basis entry blank.

It's possible that because you imported your 1099-B, and your stock sale was employee stock (which often requires a cost basis adjustment) that TurboTax displayed that screen for you.

Here's more info on Adjusted Cost Basis.

@PLV

Thank you.