Anyone have any luck at all figuring out how to unravel ETrade/BC misreporting cost basis for awarded shares?
It is one thing for them to sc--w up their award, but looks like they are misreporting historical information from VMW awards as well.
I see the petition - not sure if I want to sign it as it looks like a lawsuit is in the cards.
@3qxa+1rKQqFCx
That's why I'm paying a cpa lol.
My 0-research understanding is that if you were to buy a share of a stock for $80,
then it grows to $100
and a dividend is issued for $25
but actually $15 is a basis return and $10 is taxable dividend income
(and the share price drops to $75 due to payout)
and then it grows back to $100 and you sell.
You owe taxes in the dividend year on the $10 taxable income
Your basis was $80 but you had $15 returned, so your basis is now $65
So when you sell your gains would be taxed on $100-65=$35
even though your gain was only $20 if considered from your original basis amount.
So a return of basis helps you not pay tax at dividend time, but actually increases your tax burden at final sale time. But still, you're better off with a real cost basis, even if reduced by the adjustment amount, than a cost basis of $0 (where in the example you would owe taxes on all $100).
@1apo+1rKQqFCx
The issue is that the dividends actually were partly refunds of cost basis.
What does that mean? Should we add that column to FMV on vest/purchase of RSU and ESPP, or subtract it? Or ignore it?
@2iyj+1rKQqFCx me again, back already. ETrade's form for 2021 shows the expected breakdown of taxable and nontaxable distributions, so at least they didn't mess up back then.
@1apo+1rKQqFCx
The issue is that the dividends actually were partly refunds of cost basis.
Per:
https://investors.broadcom.com/static-files/c03396b2-538b-42c3-910c-dce218d5d9f1
the dividend of $27.40 was $10.53 taxable and $16.87 a non-taxable refund of basis. I'm hiring a CPA to do this year's taxes, and I plan on going back to 2021's taxes to see if the dividend was properly reported as 38.4% taxable. Since, ya know, etrade probably fd it up too.
https://github.com/hickeng/financial
^^ In above sheet, in the "Reference" section, he has listed "Cost basis events" and under that there are 2 special dividend entries (12/2018, 10/2021). I did not understand the meaning of Basis Adjustment column for these 2 rows. I thought there was no basis adjustment needed from these dividends as we have already paid taxes on those and they are separate from the stock price cost basis. Am I missing something? Are those 2 special dividend adjustments needed for cost basis of Broadcom transaction payout?
I didn't anticipate it would be so complex or subjective to deal with the AVGO shares, but I'm glad I decided to sell all my exercisable VMW RSUs before the acquisition closed.
https://github.com/hickeng/financial
Cost basis is indeed there - but not reported correctly on statements or tax docs.
There’s not much to unravel for taxes. The cost basis is there, either in a separate supplemental document or at the end of the consolidated 1099 in the supplemental section. You have all the numbers needed to file proper taxes at the correct cost basis, you just need to know how or hire someone who does.
Dividend vs capital gains isn’t an argument according to my CPA. The way it was handled, uniformly for all share holders, with a set price consideration etc. is standard procedure and it will have different impacts in different regions depending on tax laws. Nothing fraudulent was done, some people just don’t like the payment being tagged as a dividend for tax purposes and are pi---d.