How does adjusted cost basis work with RSU? And should I use it?

Question

I've got an 1099-b for some RSUs sold. I've also got a Stock Plan Transactions Supplement form. The Stock Plan Transactions Supplement shows the 'adjusted cost basis'. The 1099-b does not. The difference is a $1000.

What is adjusted cost basis? How does it differ from cost basis? What should I used as the cost basis when filling out taxes?

Reason for asking: TurboTax autofilled my cost-basis from the 1099-b. I'm wondering if I should manually edit that value with the adjusted cost basis instead.

Thanks!

Answer 1

Turbo Tax should support adding adjustments to the cost basis. But the bottom line - yes, you should use the adjusted cost basis.

Here's the E*Trade document that explains the whole thing in great details. Look at "Step Three" on page 9.

Answer 2

The cost basis you should use is the value of the stock at the time you received the actual shares (i.e. when they vested). If that's what's reported on the Adjusted Cost Basis, then that's what you should use. The ensures that you're only paying capital gains tax on the gain since you received the stock.

I received RSUs through ETrade for many years and never was given a cost basis. I always just looked up the stock price on the day I received them and used that. It may not have been exactly the price that was used to calculate the income tax on the RSU itself, but for gains tax purposes it was close enough. It seems like they've at least started reporting the amount that was subject to income tax as "Adjusted Cost Basis".