NUA capital gain

[gabjo00]

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?

[qbteachmt]

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

https://fitaxguy.com/tax-return-reporting-for-net-unrealized-appreciation/