|
Posted by hotblues20 on March 7, 2007, 4:49 am
Please log in for more thread options
I need some help.
I received an under-payment notice from the IRS for 2005
yesterday.
The issue was my company stock option which I took on
11/07/05. The taxes on the gain were taken out when
exersized, and the realized gain appeared on my w-2 under
box 12a unedr code "v". Let's say the gain was $5,000 on a
stock price of $60 with an option price of $30.
The problem is I have discovered that a 1099-B was issued by
my company indicating the FULL amount of the deal, let's say
$15,000.
Now the IRS wants me to pay taxes on the $15,000 - when my
only gain was $5,000...and of that $5,000, the taxes were
already taken out.
Note, these are classified as non-qualified stock options,
not ISO's.
Thoughts? Am I screwed?
Thanks,
Steve The Bluesman
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
|
|
Posted by Rich Carreiro on March 8, 2007, 12:04 am
Please log in for more thread options
hotblues20@netscape.net writes:
> The issue was my company stock option which I took on
> 11/07/05. The taxes on the gain were taken out when
> exersized, and the realized gain appeared on my w-2 under
> box 12a unedr code "v".
And the gain darn well better have been included
in box 1 of your W-2 as well, or else your employer
screwed up.
> Let's say the gain was $5,000 on a
> stock price of $60 with an option price of $30.
>
> The problem is I have discovered that a 1099-B was issued by
> my company indicating the FULL amount of the deal, let's say
> $15,000.
As the company was required by law to do.
> Now the IRS wants me to pay taxes on the $15,000 - when my
> only gain was $5,000...and of that $5,000, the taxes were
> already taken out.
That's because you didn't do your tax return right.
You needed to report the sale on Schedule D. Gross
proceeds are $15000 and basis is the exercise price
plus the income shown on your W-2 (which means the
gain on the sale is virtually zero). By not reporting
the sale, the IRS assumes zero basis (after all, they
have no other data to go on) and a $15000 gain.
> Thoughts? Am I screwed?
No. But you screwed up and need to amend your
return to report the sale properly.
--
Rich Carreiro rlcarr@animato.arlington.ma.us
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
|
|
Posted by Benjamin Yazersky CPA on March 8, 2007, 12:04 am
Please log in for more thread options
> I need some help.
>
> I received an under-payment notice from the IRS for 2005
> yesterday.
>
> The issue was my company stock option which I took on
> 11/07/05. The taxes on the gain were taken out when
> exersized, and the realized gain appeared on my w-2 under
> box 12a unedr code "v". Let's say the gain was $5,000 on a
> stock price of $60 with an option price of $30.
>
> The problem is I have discovered that a 1099-B was issued by
> my company indicating the FULL amount of the deal, let's say
> $15,000.
>
> Now the IRS wants me to pay taxes on the $15,000 - when my
> only gain was $5,000...and of that $5,000, the taxes were
> already taken out.
>
> Note, these are classified as non-qualified stock options,
> not ISO's.
>
> Thoughts? Am I screwed?
Not quite sure of exactly what you have here.
But, on the surface it seems like something I've seen quite
frequently.
When you exercised & purchased the stock, the amount was
added to your W2 wages and possibly an additional amount for
tax withheld. This amount becomes your basis for when you
sell the stock. In many cases, the stock is sold
immediately. The sale of the stock is what generated the
1099B reporting. So, there is likely only a small gain or
loss on the stock transaction.
The IRS is most likely auto generating the notice based on
the 1099B
You should probably consult your CPA/tax advisor to respond
to the IRS notice and to amend your tax returns (Fed &
state) to correctly present the transaction.
___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] >>>
-----> real address on hobokeni or hobokenx <-----
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
|
|
Posted by bono9763@yahoo.com on March 8, 2007, 12:04 am
Please log in for more thread options hotblue...@netscape.net wrote:
> I need some help.
>
> I received an under-payment notice from the IRS for 2005
> yesterday.
>
> The issue was my company stock option which I took on
> 11/07/05. The taxes on the gain were taken out when
> exersized, and the realized gain appeared on my w-2 under
> box 12a unedr code "v". Let's say the gain was $5,000 on a
> stock price of $60 with an option price of $30.
>
> The problem is I have discovered that a 1099-B was issued by
> my company indicating the FULL amount of the deal, let's say
> $15,000.
>
> Now the IRS wants me to pay taxes on the $15,000 - when my
> only gain was $5,000...and of that $5,000, the taxes were
> already taken out.
>
> Note, these are classified as non-qualified stock options,
> not ISO's.
>
> Thoughts? Am I screwed?
You failed to file a Schedule D showing your basis in the
stock when you sold it. With no information, the IRS assumes
a basis of zero and tax the entire gain. Your basis was what
you paid for it ($30 per share in your example above) plus
the $5000 in gain reported on your W2. If you had to pay
sales charges, the result is ususally a small loss on the
sale.
Your only problem was in having your taxes done by someone
who didn't know what they were doing.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
|
| Similar Threads | Posted | | Stock Option Freeze | November 26, 2006, 11:13 am |
| Exercising a stock option | January 9, 2008, 9:02 am |
| Adding Option cost to stock basis | February 10, 2008, 2:41 pm |
| Best Tax Software to handle various stock & option transactions? | June 21, 2008, 10:46 pm |
| Bank screwed up IRA - any recourse? | April 18, 2008, 6:12 pm |
| Computer Depreciation Three Year Option? | October 13, 2008, 11:39 pm |
| ESPP discount w/o fixed option price | February 4, 2008, 11:14 pm |
| Any Option to Apply Partial or No NOL Carryforward to Current Tax Year? | September 2, 2008, 9:43 am |
| How to report option spread on Sched D when both legs exercised? | October 20, 2008, 10:32 am |
| Stock Options | February 18, 2007, 9:51 pm |
|
|
Yahoo! 
Google 
Windows Live 
del.icio.us 
digg 
Netscape 
XML Sitemap