Reporting Stock options

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Subject Author Date Reporting Stock options Roy Starrin 02-17-2009  Re: Reporting Stock options Rich Carreiro 02-17-2009  Re: Reporting Stock options removeps-groups@yahoo.com 02-17-2009
Posted by Roy Starrin on February 17, 2009, 9:27 am Please log in for more thread options Friend called me. He says he exercised some employee stock options, which he immediately sold, in 2008. His company included the profit in his W2 as I understand it, as well as including it in whatever reports such maneuvers. He said if he reports it under both categories it appears to really jack up his taxable income. Since this is beyond me (to whom he came for advice) based on what little info I have, where should I tell him to look, or handle it, or whatever. Best I could come up with was to call IRS and ask them. -- << ------------------------------------------------------- >> << 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 (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Rich Carreiro on February 17, 2009, 10:50 am Please log in for more thread options > Friend called me. He says he exercised some employee stock options, > which he immediately sold, in 2008. His company included the profit > in his W2 as I understand it, Which is correct. > as well as including it in whatever reports such maneuvers. The sales proceeds are required to be reported on 1099-B, yes. > He said if he reports it under both categories it appears to really > jack up his taxable income. It gets reported in both places. However, he has to adjust the basis in the sold stock upwards by the amount reported on the W-2. This will eliminate virtually all the apparent capital gain and thus eliminate the apparent double-taxation problem. See here as well: http://fairmark.com/execcomp/index.htm -- Rich Carreiro rlc-news@rlcarr.com -- << ------------------------------------------------------- >> << 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 (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by removeps-groups@yahoo.com on February 17, 2009, 2:11 pm Please log in for more thread options > It gets reported in both places. However, he has to adjust the > basis in the sold stock upwards by the amount reported on the W-2. > This will eliminate virtually all the apparent capital gain and thus > eliminate the apparent double-taxation problem. And furthermore, he might end up with a loss equal to the commissions. Suppose the W2 income because of profit from exercise is $4000, and the proceeds are $16000. If the commissions are $20, then the cost basis on Schedule D is $16020, and you have a net loss on Schedule D. -- << ------------------------------------------------------- >> << 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 (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted Options Tax Reporting March 4, 2008, 11:31 am Stock Options February 18, 2007, 9:51 pm stock options April 15, 2006, 2:59 am Statutory Stock Options? How to tell? February 16, 2008, 12:03 pm Foreign Resident and Stock Options January 12, 2007, 2:47 am Non-Qualified Stock Options and Schedule D? February 3, 2009, 9:12 pm How to handle stock options that were NOT exercised and sold @ a loss? December 30, 2007, 2:40 pm Exercise stock options 9 years after leaving employer April 4, 2008, 12:14 am Re: 1099-B Restricted Stock Options sale...Do I need to file a Schedule D? March 17, 2008, 10:29 pm Is interest paymennt on loan to exercise NQ stock options mdeductible?i April 25, 2006, 7:49 am