neworchid wrote: Fri Oct 17, 2025 8:49 pm
Alan S. wrote: Mon Aug 25, 2025 5:51 pm
Your reporting situation was simpler than if you had sold with an additional gain in the first year. But because the IRS did not receive the cost basis you provided (uncovered as expected) and would not know whether NUA was involved or not, if they inquired about the basis you reported, you probably would have had to provide a copy of the 1099R issued for the LSD as part of your explanation. Taxpayers should retain that 1099R until about 5 years after the last NUA shares are sold.
Thank you for this recommendation. Really appreciate your weighing in.
Alan S. wrote: Mon Aug 25, 2025 10:11 pm
1e (the cost basis) is the value per share at distribution less the NUA per share. For example, if you had any after tax contributions allocated to the share purchase, because Box 2a shows only the TAXABLE cost basis, you would have to add Box 2a to Box 5 to get the total cost basis you would report per share when you sold the shares after distribution. You would divide the total cost basis by the # of shares distributed to get the cost basis per share.
Not sure I understand this. This probably does not apply if I don’t have any after-tax contributions, right?
BigJohn wrote: Mon Aug 25, 2025 5:08 pmI found a 1099 from 2019 with some NUA share sales. The date acquired (in 2015) and cost basis were on the form and consistent with the input form I gave VG. As a result, the LTCG shown was correct. They were categorized as “long term noncovered” with the basis not reported to the IRS.
Thank you so much for these details. I’m trying to take notes from this thread to make sure I understand and as a guide for our future sales.
I apologize if these sound repetitive but it helps solidify my understanding if I have an illustration.
(1) Do I have the details captured correctly in the illustration below?
(2) The Cost Basis at the time of NUA distribution is cost per share, right? Our NUA distribution is a little unusual in that the company stock inside the 401K is a different ticker (and price/share) exclusive to the 401K and it will be converted into the regular ticker available to the public. As I understand it, what we can see now as cost/share will translate into a different cost/share once distribution is complete. Confirmed with the 401K custodian that this is still a NUA distribution. Do you see any potential issues here?
(3) With regard to the Cost Basis we will provide to the new custodian – it will be what we receive in writing from the 401K custodian, and the Date of Distribution will now be the Date of Acquisition that we submit to the new custodian. Is my understanding correct?
Thank you again for your patience answering my questions. I really appreciate it.
Correct, except that the 1099B for the sale of 30 shares will be quite different from your example:
The cost basis is 3,600 (30*120)
LTCG is 20,400
You will pay taxes on the cost basis when distributed from the plan (1099R), but no tax on the NUA per share.
When you later sell the NUA shares, you will then owe the LTCG tax on the NUA per share plus any gains generated after distribution from the plan.
