Net Unrealized Appreciation - How to Recognize Upon Sale of Stock


B

BobLeavitt

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
 

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