AMT and Equity Compensation
Alternative minimum tax, nonqualified stock options, incentive stock options and other forms of equity compensation.
RSUs and Form 1099B reporting
Posted by: deedee8712, February 15, 2016 09:37PM
I had RSUs vest in 2015. Fidelity Brokerage sold ~40% to pay taxes. The sale price was ~1% lower than the vest price. The RSUs included four grants between one and four years ago. The sales were reported on the IRS section of Form 1099B as five transactions even though the sell price was identical to four decimal places. The IRS section of Form 1099B did not report a basis for the shares sold. The proceeds reported was accurate. I had no other transactions in this stock either before these transactions (vest/tax sale) nor after.

The unofficial section of Form 1099B reported ten transactions (aka lots). It listed each as having a wash loss. The new basis should have been the original basis (vest value) plus the wash loss. Some of the lots had the correct adjusted basis and some had a higher adjusted basis.

My 2015 W-2 included the accurate vest value of all RSUs.

What should I do? Since the Form 1099 did not report a basis, should I report the accurate basis and take a short-term capital loss? or should I report the accurate basis and say it was a wash sale with the accurate calculation? or should I provide the unofficial (bad) data from the Form 1099B?

Fidelity stock services claims the multiple transactions cause the wash sale rule to apply. I maintain that these are sham transactions given that everyone in the company got the same sale price (to four decimal places) there is really one sale transaction with accounting tricks to make it appear there were many.

Re: RSUs and Form 1099B reporting
Posted by: Kaye Thomas, February 25, 2016 04:05PM
I would not treat these as wash sales. For one thing, when you are selling part of a single lot of shares, you don't report a wash sale based on having retained part of that same lot of shares. As you've correctly surmised, the shares you acquired on this vesting date are properly treated as a single lot of shares, even though Fidelity's software treats them as multiple lots. In addition, in my view the IRS position that vesting of shares should be treated as a "purchase" for purposes of the wash sale rule is so plainly contrary to law that it can be safely ignored.

As you've observed, the 1099 doesn't report the basis of these shares to the IRS, so your failure to follow the reporting suggested in the unofficial information supplied by Fidelity will not come to the attention of the IRS -- and if it did, it's hard to imagine that they would disagree with my first point above.

Kaye Thomas

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