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NUA capital gain

Level 3

Hi Colleagues,

Client has a 1099-R for shares exercised from her ESPP in her IRA from a previous employer. The 1099-R has a value in Box 1, a value in box 2 and a value in box 6.  The sum of boxes 2 and 6 equal box 1.  This client also has a 1099-B with no cost basis.

Am I correct that box 2 is taxed as ordinary income and box 6 is the long term capital gain on this exercise.  Therefore, I will back-in to the adjusted cost basis so that the NUA in box 6 is on schedule D as long term capital gain?

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1 Comment 1
Level 15

There are a lot of moving parts for this. I found an article that does a great job of breaking it out into parts:



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