Often the two transactions happen simultaneously as a single event, but your tax return has to reflect two. For an employee, this income is included in the wages reported on Form W-2, and non-employees should see it reflected on Form MISC. Not so the second part of the transaction. You need to track down the correct information on your own.

TMF: options not on B? / Tax Strategies

You should receive Form B from the broker, providing information to you and to the IRS about the transaction. One item of information on that form is the proceeds of the sale. You should be able to rely on this number. The form may also state the basis of the shares.

For stock acquired by exercising a nonqualified option, the basis shown on Form B will generally be incorrect. The basic rule here is that your basis is the sum of a the amount you paid for the shares that is, the exercise price of the option and b the amount of compensation income you reported in connection with the exercise of the option. This sale of stock will appear on Form The problem is how to handle the situation where you have a Form B on which the broker reported incorrect basis.

The IRS understands that this will frequently happen and provides a way for you to make the adjustment. In the usual case, the basis reported by the broker is incorrect because the adjustment for income reported on exercise of the option is omitted.

Basis is subtracted to determine gain or loss, so this is a negative adjustment, which should be shown in parentheses. Form , sale of XYZ stock, broker failed to adjust basis for compensation income reported on exercise of compensatory option.

Alternative Minimum Tax AMT. Compensation in Stock and Options.

How have IRS Form B and cost-basis reporting changed for sales of stock acquired from my stock options, restricted stock, or ESPP? What do I need to do differently because of the changes? - dakoxok.web.fc2.com

Home Our Books Tax Help Forum About Contact Search. Reporting Sales of Nonqualified Option Stock By Kaye A.

How to avoid paying double tax on employee stock options - SFGate

Thomas Current as of January 11, Form Basis Adjustment. Our books That Thing Rich People Do The fastest, easiest way to learn the principles of investing. Our complete guide to Roth IRAs and Roth accounts in employer plans: Consider Your Options A plain-language guide for people who receive stock options or other forms of equity compensation.

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A plain-language guide for people who receive stock options or other forms of equity compensation. A text for financial advisors and other professionals who offer advice on how to handle equity compensation including stock options.

Capital Gains, Minimal Taxes. Tax rules and strategies for people who buy, own and sell stocks, mutual funds and stock options.