Net Unrealized Appreciation - How to Recognize Upon Sale of Stock

Discussion in 'Tax' started by BobLeavitt, Jan 20, 2004.

  1. BobLeavitt

    BobLeavitt Guest

    Exactly how does one report NUA on Sched D for the tax year
    in which some of the stock subject to NUA is sold. I cannot
    find relevant instructions anyplace. (Actually, I wonder if
    the IRS even keeps track of the NUA reported on Forms
    1099R).

    For example, rec'd distribution of 1000 shares of company
    stock from 401K on
    May 15, 2001. 1099R showed:
    Box 1 - $38,180
    Box 2a - $12,680
    Box 6 - $25,500

    Sold 400 shares of subject stock on Dec 1, 2003 for $37.00

    I assume I show on Sched D a LT loss based of $472 (400
    shares x $1.18)

    But where/how do I have report and describe the LT gain in
    respect of the NUA of $10,200 (400 shares x $25.50).

    Of course, in this instance, I could simply report netting
    the $25.50 LT gain against the $1.18 loss, but I do not
    think that is what the IRS expects, nor would it work if I
    had only held the stock for a couple of weeks following
    distribution before selling it.

    There is a ton of material out there on what NUA is and what
    goes on the 1099 for the year of distribution, but nothing I
    can find on how you report when stock is sold. Preferably
    someone could point me to the relevant instructions, but if
    not, maybe someone could explain it to me. I will very much
    appreciate any assistance.

    Thanks, Bob Leavitt
     
    BobLeavitt, Jan 20, 2004
    #1
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