Restricted stock, code V and 1099B

[Margaret CPA in OH]

Client exercised options, included on W-2, code V is exactly the gain ($85,000) reported on 1099B.  So I increased the basis on 8949 as the gain was taxed and tax withheld on W-2.  Box 14, however, shows Other Restricted Stock $17840.  I am baffled as to what, if any meaning, this amount has and whether I do anything with it.  The 1099B shows no basis for 5 transaction any where close to this figure.  Each of those transactions are code (e) referencing cost basis that may not have been adjusted for compensation income.  Client hasn't a clue.  Ideas?

[Lion EA]

Hopefully,  your client got a statement at the time of the transaction. Maybe Box 14 is stock he did NOT sell this year. Or, stock held back to pay the taxes that are in Boxes 2, 4, and 6. Or,...ask your client for all correspondence re those two blocks of stock. He may have to go to his HR department or something, but it's up to him to provide you the information you need to file.

[Margaret CPA in OH]

Thanks, Lion!  I bet you are correct about the held back amount for taxes. That makes sense.  I have asked for more correspondence and also to contact HR but no reply yet.  She retired last February so her mind really isn't into this at the moment.  I'm pretty confident (though perhaps misguided) that the increased basis to avoid double tax is the correct input, just curious about that Box 14 figure.  I hate it when there are insufficient explanations!

[Lion EA]

Box 14 is CAN be just information that's not needed this year. But, it's on your client to bring you documentation.

[joanmcq]

Restricted stock is not the same as NQSOs.  Why not ask for a paystub to see what all stock he was granted/exercised/sold.  He probably got RSUs as well as the NQSOs.  NQSO are the only ones that are reported with the code V in box 12.

I see this all the time; someone has NQSO, ESPP and RSUs all from the same company.  Then throw in some ISOs too.  Actually, I rarely see ISOs.  Just the first 3.

[Margaret CPA in OH]

Thanks, Joan.  The client is getting more info for me.  She forwarded one letter, vaguely worded with congratulations but no details.  Sigh... She is brilliant in so many ways, but not so much this (then again, I don't seem to be either!).  I will throw out all these terms which may then ring a bell.  I could extend federal as she has a big refund but owes state tax.  For now I'm thinking the Other info isn't pertinent to 2018 tax returns - right?

[Catherine]

  On 3/29/2019 at 11:30 AM, joanmcq said:

I see this all the time; someone has NQSO, ESPP and RSUs all from the same company.  Then throw in some ISOs too.  Actually, I rarely see ISOs.  Just the first 3.

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Yup; same here.  Client this year sold a mixed bag.  Doesn't know squat about any of it, and brought in a dozen or fifteen pages of printouts she'd gotten from ??? over the years.  Took me an hour and a half, with all sheets spread out on our BIG conference table, to figure out what shares were what, what basis was (if any), et cetera.  There were NQSOs, ESPP, and RSUs, *and* a few ISOs too.  She'll be paying for that time!

[joanmcq]

Since I was close to the Bay Area, I have had a lot of people in tech companies.  The reporting has gotten much better over the years, but do the clients give all that to you?  Ha!  The worst ones lately have been RSUs paid out by a US subsidiary of a Swiss company.  The client was retiring and thought he had about 1-2k in RSUs.  Turned out to be more like 300-500k.  Took about 5 years to cycle through all of them since he couldn't sell some right away (recent grants).  And there's some he's held.  So much fun figuring basis....

 

[Lion EA]

And, you can't really match them up by number of shares, with some shares held back to pay taxes, the splits/mergers/whatnot that happened over time. It's a nightmare matching the paperwork for when received to paperwork for when sold. 

[Richcpaman]

  On 3/28/2019 at 3:43 PM, Margaret CPA in OH said:

Client exercised options, included on W-2, code V is exactly the gain ($85,000) reported on 1099B.  So I increased the basis on 8949 as the gain was taxed and tax withheld on W-2.  Box 14, however, shows Other Restricted Stock $17840.  I am baffled as to what, if any meaning, this amount has and whether I do anything with it.  The 1099B shows no basis for 5 transaction any where close to this figure.  Each of those transactions are code (e) referencing cost basis that may not have been adjusted for compensation income.  Client hasn't a clue.  Ideas?

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Margaret:

Usually, if proper treatment, the Restricted Stock in Box 14 is for Dividends paid to the employee on the restricted stock, and it is included in their W2 boxes 1, 3, and 5.  It is just ordinary income.

Rich

[Margaret CPA in OH]

Thanks, Rich, for this possibility.  Would this amount have been included in the 1099DIV from Fidelity which handled the stock sale? That showed $1300 in divs, not $17K.  Client has contacted HR but no response yet.  I have also asked to see her final pay stub which may reveal more info.

[joanmcq]

It's not the dividends, it's the spread between FMV & cost.  They only get dividends once they own the stock and that's reported on the brokerage report.  The box 14 is basis because it's been reported as wages.

[Margaret CPA in OH]

Thanks, Joan! So for the moment I will assume that $17 is included in the 2018 W-2 wages and keep track as basis for such time as she sells the restricted stock?

[joanmcq]

$17? Never seen one for that little. What did they get, 1 share?

[Margaret CPA in OH]

Oops!  $17K, not $17.  Original post, way at the top, shows $17840.  Guess I got lazy, distracted or both.

[joanmcq]

Ok, that makes more sense!  When I saw $17, I thought, no wonder she thinks it's dividends!