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RSU cost basis says $0? Avoid double tax

A $0 or blank basis can make your return show too much capital gain. It isn't universal, so start with your own 1099-B. If the basis is missing or wrong, the Form 8949 fix depends on whether your broker reported that basis to the IRS.

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RSUs aren't supposed to be taxed twice. Check both the basis amount and whether the 1099-B says that basis was reported to the IRS. Those are separate questions, and they determine how you report the sale.

What actually happens

For a standard stock-settled RSU, the value of the shares when they vest or settle is generally included in your W-2 wages. The amount included in wages, plus anything you paid for the shares, becomes your cost basis. Check your employer and stock-plan records for the taxable value and date.

A $0 or blank basis is common on RSU sale records, but it isn't universal. Check your own Form 1099-B or substitute statement rather than assuming. If you use $0 when the correct basis includes value already taxed as wages, your return treats too much of the sale as capital gain.

The double-tax, illustrated

Say 100 shares vested at $80, adding $8,000 to your W-2. You paid tax on that $8,000. Later you sell all 100 shares at $90, for $9,000 proceeds.

Your actual capital gain is $1,000 (the appreciation from $80 to $90). If your 1099-B shows $0 and you report it unchanged, your return shows a $9,000 capital gain. The extra $8,000 is an overstated capital gain, not ordinary wage income. It is short-term or long-term based on how long you held the shares after vest or settlement. On an immediate sale, any gain is short-term, and net short-term capital gains are taxed at ordinary income rates. The category is different, but that $8,000 has still been counted in taxable income twice.

Choose the right Form 8949 path

First, find the statement that says whether basis was reported to the IRS. On Form 1099-B, a checked box 12 means it was. Then compare the basis amount with your vest or settlement records. If the basis is already correct, you don't need a basis correction. If it isn't, follow the matching branch.

  1. Basis was not reported to the IRS

    For a stock sale, use Form 8949 box B for a short-term transaction or box E for a long-term transaction. Enter the correct basis directly in column (e). Enter zero in column (g) unless another adjustment applies. There is no column (g) basis adjustment in this branch.

    If the basis field is blank, no code B is needed for this basis issue. If the 1099-B shows an incorrect amount but says it was not reported to the IRS, the Form 8949 code table still calls for code B in column (f), but column (g) stays at zero because the correct basis is already in column (e).

  2. Basis was reported to the IRS, but it is wrong

    Use box A for a short-term transaction or box D for a long-term transaction. Keep the basis shown on the 1099-B in column (e), enter code B in column (f), and correct the error in column (g). When the correct basis is higher than the reported basis, the adjustment is negative and goes in parentheses. In the $8,000 example above, a reported basis of $0 produces an adjustment of ($8,000).

Using tax software

Screen labels change by product and filing year. Look for a basis correction or adjustment, then inspect the generated Form 8949 before filing. It should match one of the two paths above. If you can't tell whether basis was reported to the IRS, check the full 1099-B or supplemental statement rather than relying on the import summary.

Where to find your basis

Check your vest or settlement confirmation and any supplemental stock-plan statement from your broker. Match the number of shares and transaction date to the 1099-B. If your records don't establish the correct basis, contact the broker for help before you file.

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