Shareworks (Morgan Stanley) 1099-B: Stock Plan Sales into TurboTax

Your employer uses Shareworks by Morgan Stanley to manage equity comp, you sold some vested RSUs or ESPP shares last year, and now the 1099-B shows a cost basis of $0 — or something clearly too low — on those sales. If you enter it as-is, TurboTax will tax you on the full proceeds as if the shares cost you nothing. They didn't. Here's how to fix it.

This is the single most expensive 1099-B mistake employees make, and it's built into how stock plan reporting works. The sale is fine; the reported basis is deliberately incomplete, and you have to correct it.

Why Shareworks Shows $0 (or Wrong) Cost Basis

When you vest RSUs or buy ESPP shares, part of the value is compensation income that's already reported on your W-2. But IRS rules prohibit the broker from including that compensation income in the cost basis it reports on the 1099-B. So Shareworks (which reports through Morgan Stanley's stock plan infrastructure) shows only the amount you literally paid — often $0 for RSUs, or just the discounted purchase price for ESPP.

The result: your true basis is the fair market value at vesting (for RSUs) or the price plus the taxed discount (for ESPP), but the reported basis is much lower. Report the low number and you pay capital gains tax on income you already paid ordinary tax on — double taxation.

Step 1: Get Both Documents

You need two things from Shareworks, not one:

1. The 1099-B — reports the sale proceeds and the (understated) basis
2. The Stock Plan Transactions Supplement (sometimes called a supplemental information statement) — shows the adjusted cost basis you should actually use

To download them:

1. Log in to Shareworks (or Morgan Stanley at Work)
2. Go to Documents / Tax Documents
3. Download both the 1099-B and the Supplemental statement for the tax year

The supplement is the key document. Without it, you're guessing at basis.

Step 2: Import the 1099-B

Shareworks stock plan accounts report through Morgan Stanley, so in TurboTax's direct import you'd pick Morgan Stanley at Work (see our E*TRADE / Morgan Stanley import fix for the dropdown maze). If the import fails or you'd rather not fight it, convert the PDF:

1. Upload your Shareworks 1099-B PDF to a PDF-to-CSV/TXF converter
2. Preview the extracted transactions
3. Download TXF or CSV
4. In TurboTax Desktop: File → Import → From Accounting Software → TXF File

Either way, this gets the sales into Form 8949. The basis correction happens next — the converter faithfully extracts what's on the 1099-B, including the understated basis, so you still apply the supplement.

Step 3: Apply the Adjusted Cost Basis

For each stock plan sale, replace or adjust the reported basis using the supplement:

1. Find the transaction on the Stock Plan Transactions Supplement
2. Note the adjusted cost basis (it includes the compensation income already on your W-2)
3. In TurboTax, edit that Form 8949 row and enter the corrected basis, or use adjustment code B (basis reported to the IRS is incorrect) with the difference in column (g)

The exact mechanics differ for RSUs vs ESPP:

• RSUs: true basis = fair market value at vesting. See RSU cost basis wrong on 1099-B.
• ESPP: true basis includes the discount taxed as income; qualifying vs disqualifying dispositions change the math. See ESPP cost basis double-counted.
• NSO/ISO options: the spread at exercise is often already in your W-2. See NSO/ISO stock options double-counted.

Step 4: Verify You're Not Double-Taxed

The tell that you got it right: your gain on the stock plan shares should be small if you sold shortly after vesting (just the price movement since vest), not a huge gain equal to the full share value.

1. Confirm each stock plan row uses the adjusted basis, not the reported $0
2. Match total proceeds to the 1099-B summary
3. Sanity-check the gain — a same-day or near-vest sale should show little or no gain
4. Confirm short-term vs long-term (RSUs sold soon after vest are short-term)

FAQ

Why does my Shareworks 1099-B show $0 cost basis?

Because IRS rules bar the broker from including the compensation income already on your W-2 in the reported basis. Your true basis is the fair market value at vesting (RSUs) or price plus taxed discount (ESPP) — you correct it using the supplemental statement.

What is the Stock Plan Transactions Supplement?

It's a separate Shareworks document that shows the adjusted cost basis for your stock plan sales — the number you should actually report. Always download it alongside the 1099-B.

Which broker do I pick in TurboTax for Shareworks?

Shareworks stock plan accounts report through Morgan Stanley, so pick Morgan Stanley at Work in the import dropdown. If that fails, convert the 1099-B PDF and apply the supplement manually.

How do I fix the cost basis in TurboTax?

Edit the Form 8949 row and enter the adjusted basis from the supplement, or use adjustment code B with the difference in column (g). Either way, the reported $0 (or low) basis gets corrected upward.

Will I be double-taxed if I don't adjust the basis?

Yes. Reporting the understated basis means paying capital gains tax on compensation income you already paid ordinary income tax on via your W-2. Applying the supplement prevents it.

Can the converter apply the supplement automatically?

No. The converter extracts exactly what's on the 1099-B, including the understated basis. The supplement adjustment is applied on your Form 8949 after import — but the converter saves you from retyping the sales themselves.

Is the Shareworks supplement filed with the IRS?

No. The Stock Plan Transactions Supplement is for your use to compute the correct basis. You report the adjusted basis on Form 8949; the IRS receives the 1099-B figure plus your adjustment, not the supplement itself.

Does the $0 basis mean my employer made a mistake?

No. Reporting $0 (or a low) basis on stock plan shares is exactly what IRS rules require, because the compensation income is already on your W-2. The supplement gives you the adjusted number you're supposed to use.

What if I sold Shareworks shares the same year they vested?

You still adjust basis to the vesting fair market value. A same-year sale is short-term, and once the basis is corrected the gain should be small — just the price movement since vesting.

Bottom Line

A Shareworks 1099-B is not hard to import — it's hard to report correctly, because the cost basis is intentionally understated. Get both the 1099-B and the Stock Plan Transactions Supplement, import or convert the sales, then apply the adjusted basis from the supplement on every stock plan row. Done right, your gain reflects only the price movement since vesting, not the full value of shares you already paid income tax on.

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Sold RSUs or ESPP through Shareworks? Convert your 1099-B free — upload the PDF to get the sales into TurboTax cleanly, then apply your supplement so you're not taxed twice on the same shares.