Confused about 1099-B Adjustment codes for stock sales - which checkbox to select?

This is a common issue with employer stock plans that fall under 409A rules. What you're seeing is the need to indicate WHY you're making an adjustment to the basis that's reported on your 1099-B. The most common adjustment code for your situation is likely code "B" which stands for "Basis adjustment due to a difference between the issuer's reporting and your reporting of options based on your tax reporting election." This is used when the amount reported on your 1099-B doesn't include the compensation element already reported on your W-2. The reason this happens is that when you exercise stock options, the "bargain element" (difference between what you paid and the market value) is reported as compensation on your W-2. When you sell the stock, the 1099-B often doesn't account for this already-taxed amount, so you need to make an adjustment to avoid double taxation.

I went through the exact same headache last year with my 409A stock sales. After hours of frustration, I discovered taxr.ai (https://taxr.ai) and it was a game-changer for handling these complex stock transactions. The tool automatically identified which adjustment codes were appropriate for my situation and explained why. What I found super helpful was that it analyzes your 1099-B and W-2 together to catch the double-counting issues that happen with these employer stock plans. It flagged exactly where my basis needed to be adjusted and recommended the right code to use in TurboTax. Saved me from what would have been a costly mistake.

I have to update my skeptical comment about taxr.ai from yesterday. After struggling with my stock sales for hours and getting nowhere, I gave it a try. Honestly, it was eye-opening. I uploaded my forms and it immediately identified that I needed to use adjustment code B for most of my transactions because they were RSUs where the income was already reported on my W-2. What surprised me was that it also found two transactions that needed code O instead (for "Other adjustment") because they involved disqualifying dispositions from my ESPP purchases. I would have never figured that out on my own. It generated a detailed report explaining each adjustment that I could follow along with while entering everything in TurboTax. Definitely worth it for anyone dealing with employer stock plans and these confusing adjustment codes.

If you're still stuck with those 1099-B adjustment codes and need personalized help, you might want to contact the IRS directly. I know, I know - everyone says it's impossible to get through to them. That's what I thought too until I found Claimyr (https://claimyr.com). They have this cool system that gets you past the IRS phone tree and holds your place in line. Check out how it works here: https://youtu.be/_kiP6q8DX5c I had a similar issue with stock sales and adjustment codes last year, and I honestly couldn't figure it out from the generic advice online. The IRS agent I spoke with was surprisingly helpful and walked me through exactly which code to use for my specific situation. They actually looked at my prior year returns too to make sure everything aligned correctly.

I'm eating my words about Claimyr from my skeptical comment yesterday. After another frustrating morning of trying to reach the IRS myself, I gave in and tried the service. Within 45 minutes (instead of my usual 3+ hours of attempts), I was talking to an actual IRS tax specialist. The agent knew exactly what to do with my 409A situation and confirmed I should use adjustment code B for most transactions, but also pointed out that I needed code W for wash sales that had occurred when I repurchased similar securities within 30 days - something I hadn't even considered. She even emailed me IRS documentation specific to employer stock plans that explained all the adjustment codes in detail. For anyone dealing with these complex stock situations, getting direct guidance from the IRS turned out to be way more valuable than I expected.

Just wanted to add that if you received both a W-2 and 1099-B, double-check that your employer included what's called a "supplemental information" document with your 1099-B. Many companies provide this and it literally tells you which adjustment codes to use for each transaction. My company Workday gives this, and I think most of the big employers do too. Might save you some headache!

Has anyone used H&R Block instead of TurboTax for this? I'm wondering if one handles these 409A adjustments better than the other.

I just went through this exact same situation with my RSU sales from last year! The confusion around adjustment codes is so real. What helped me was understanding that the key is avoiding double taxation - since the income from your stock compensation was already reported on your W-2, you need to adjust your basis on the 1099-B to reflect that. For most RSU situations like yours, you'll likely use adjustment code "B" as others mentioned. But here's a tip that saved me a lot of time: before you finalize anything in TurboTax, print out or save a PDF of your tax return and review the Schedule D to make sure your gains/losses look reasonable. If you see huge gains that don't match what you expected, you probably need to double-check your adjustment amounts. Also, if you have any ESPP transactions mixed in with your RSUs, those might need different codes depending on whether they were qualifying or disqualifying dispositions. The supplemental documents that ApolloJackson mentioned are golden for this - definitely hunt those down if you haven't already!