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Since 2014 brokers don't include "compensation element" in cost basis on the 1099-B form for RSUs, ESPP and NQSO stock. This means that I have to adjust cost basis myself to avoid being double taxed.

However, in my 8949 my tax consultant simply updated column "(e) cost or other basis" without specifying anything in columns "(f) code from instructions" and "(g) amount of adjustment". My coworkers told me that correct way to do this is by using (f) and (g) columns.

  1. So what is the correct way to update cost basis in 8949?
  2. If my tax consultant updated directly column (g) then could IRS ask me to fix it or could that even be a trigger to audit me, because there would be a mismatch between my 8949 column (e) and what my broker reported to IRS?
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As long as the bottom line is correct, even if the IRS asks you questions, you can just provide substantiation and explain how you got the numbers. Reporting the numbers in the wrong field is not, on its own, a crime.

However, the right way is to report cost basis as it is on 1099, and use the adjustment columns to make and explain the adjustments. It can be that the IRS will send you a letter asking to explain the mismatch.

Your tax preparer should help you respond to such a letter, if it arrives, for free, being it his mistake.

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