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> you personally need to report additional information for things like capital gains tax on asset sales This part annoys me; when I would have RSU's vest, my b

by fire 4y ago

> you personally need to report additional information for things like capital gains tax on asset sales This part annoys me; when I would have RSU's vest, my broker would send me a 1095B(?) which plainly lists stock price at time of acquire and time of sale, and the gains, which for RSU's sold at time of vesting is 0 but for some reason I don't understand, they don't report the cost basis to the IRS, just the sale and price at time of acquire, so if you don't file your taxes to fill in that cost basis information, the IRS will cite you as having earned the entire sell cost of the stock! This fucks up a lot of people new to tech/taxes, and I still haven't been able to find documentation on why they don't file the cost basis for you if they're reporting the sale anyway.

junar 4y ago
The broker didn't report the cost basis to the IRS because they don't have to. They only have to do this for "covered securities" [1], which include stocks you buy with cash, but don't include stocks you acquire as employee compensation. [1] https://www.irs.gov/instructions/i1099b#idm139900428766768 https://www.irs.gov/instructions/i1099b#idm139900428766768
junar 4y ago
Also, it sounds like brokers are somewhat to blame, because they made comments to the IRS opposing additional reporting for stock compensation: > ... commenters asked that there be no change to the Form 1099-B to reflect compensation status or, alternatively, that using the indicator be permitted, but not required. These commenters indicated that compensation information is not accessible to most brokers, and extensive reprogramming for both the underlying database and the reporting process would be required. The commenters also expressed concerns that, in many situations, a broker would have to accept customer-provided information in order to track the compensation-related status. > The lack of a mechanism to communicate whether the basis of stock has been adjusted for the exercise of a compensatory option coupled with a system involving discretionary broker adjustments for compensatory options would, however, be unworkable. > A broker may not increase initial basis for income recognized upon the exercise of a compensatory option or the vesting or exercise of other equity-based compensation arrangements, granted or acquired on or after January 1, 2014. https://www.federalregister.gov/documents/2013/04/18/2013-09085/basis-reporting-by-securities-brokers-and-basis-determination-for-debt-instruments-and-options https://www.federalregister.gov/documents/2013/04/18/2013-09...

by fire 4y ago

junar 4y ago

The broker didn't report the cost basis to the IRS because they don't have to. They only have to do this for "covered securities" [1], which include stocks you buy with cash, but don't include stocks you acquire as employee compensation. [1] https://www.irs.gov/instructions/i1099b#idm139900428766768 https://www.irs.gov/instructions/i1099b#idm139900428766768

junar 4y ago

Also, it sounds like brokers are somewhat to blame, because they made comments to the IRS opposing additional reporting for stock compensation: > ... commenters asked that there be no change to the Form 1099-B to reflect compensation status or, alternatively, that using the indicator be permitted, but not required. These commenters indicated that compensation information is not accessible to most brokers, and extensive reprogramming for both the underlying database and the reporting process would be required. The commenters also expressed concerns that, in many situations, a broker would have to accept customer-provided information in order to track the compensation-related status. > The lack of a mechanism to communicate whether the basis of stock has been adjusted for the exercise of a compensatory option coupled with a system involving discretionary broker adjustments for compensatory options would, however, be unworkable. > A broker may not increase initial basis for income recognized upon the exercise of a compensatory option or the vesting or exercise of other equity-based compensation arrangements, granted or acquired on or after January 1, 2014. https://www.federalregister.gov/documents/2013/04/18/2013-09085/basis-reporting-by-securities-brokers-and-basis-determination-for-debt-instruments-and-options https://www.federalregister.gov/documents/2013/04/18/2013-09...