NUA Cost Basis
Client processed a NUA distribution in 2022, basis of $39,000 was furnished to the IRS. The basis of $39,000 consists of many lots to sum $39,000. Does the NUA basis get averaged across all shares equally or if client has specific lot detail can he use the specific lot basis for future sells?
I assume he would use basis for each lot since total of all lots equals IRS reported figure of $39,000 but felt I would ask forum for clarification.
Permalink Submitted by Alan - IRA critic on Tue, 2024-04-30 17:16
Without written documentation directly from the plan (as opposed to just client’s records), using specific shares for reporting the sale of NUA shares is risky. The IRS has been silent on this issue, but if the IRS audited the entire return for any reason, whether they to the use of specific shares probably depends on the auditor. It’s much safer to use an average cost basis.
The current broker will treat these shares as uncovered, so the client will be responsible for showing the cost basis on Form 8949.