1099-B & 1099-R

[Ochumare]

Hello,   Please need your help as I have never dealt with this scenario before.    I have a client that sold stocks at his job and received two separate forms (1099-R & 1099-B) reporting the same transaction/amount ($80K).   Form 1099-B is showing the proceed amount ($80K) but not the cost or other basis; I am thinking I need this in order to complete form 8949 right?  Client doe not have any other info.  My question is:  How or what form do I use to report this in Proseries?      Please help   Thanks

[sjrcpa]

The stock was in an ESOP?

He took a distribution of the stock, and then sold it?

[Ochumare]

Yes, it was ESOP stocks.  He had the stocks, sold a portion and took the cash distribution.  Thanks

[sjrcpa]

If I understand the situation - 1099-R amount is fully taxable. 

Basis of stock sold = taxable amount from 1099-R (assuming # shares sold = # shares distributed from the ESOP.)

FYI - your client was given paperwork on this.

[Terry53029]

If your client is under 59 1/2 he could also be subject to a 10% penalty, as an ESOP is a qualified retirement plan. I believe it should also be long term for the 1099B

[qbteachmt]

To give a simplified explanation:

Your employer pledges that you have shares as part of compensation. Setting aside which sort of stock agreements are taxable when, the point is that this is compensation, so it will be taxable. Typically, you are going to see this on W2, even if the person doesn't have possession of those shares.

When they sell the shares, the point at which it was "awarded" is that taxable event and that is the point of Basis. That's why it is more usual to need them to find their old W2.

And then the selling is either inhouse, or done through a brokerage, and that triggers the 1099-B, as usual.

So, in the case of your taxpayer, ESOP shares were released (triggering a taxable event and the 1099-R) and then sold (converted to cash, apparently) and hence, the 1099-B.

Find out if the taxpayer asked for this distribution, or if the employer terminated the ESOP, or your taxpayer is now disabled? There are scenarios that are exempt from the penalty.

Hope that helps.