Where do I report the sale of shares of a private company (ISO shares) to a company investor?

Forum|Forum|5 years ago
March 20, 2021
1 reply
3 views

I exercised my purchase of the shares after leaving the company. I think sold them following a subsequent funding round 18 months later.

TurboTax Live Self Employed

ToddL99

Level 13

Report the private sale of stock in the same interview that you would report the sale of publicly-traded stock, the Stocks, Mutual Funds, Bonds and Other interview of Investment Income.

Since you did not receive a Form 1099-B, you'll select the "Other" option (see screen below). The interview questions that follow will allow you to enter your proceeds, holding period and cost basis.

mneeley62Author

Level 2

Thanks Todd. However, this doesn't seem to apply. These were ISO shares. The only option in the drop-down menu is Stock (non-employee). When I select Learn more it states "If you sold index funds, options, ETF, ESPP, NQSO, ISO, RSU, or RS, choose Stocks, Bonds, Mutual Funds. Only choose Other if you sold a second home, land, collectibles, personal items, or liquidated distributions." I am going ahead and entering it now choosing "Stock (non-employee), but I question whether that is the right move.

ToddL99

Level 13

As long as you report the cost basis correctly, it won't make any difference if you use the Stock (non-employee) route. The IRS really doesn't care how you got the stock, just that you report the proceeds, cost basis and holding periods correctly.

The reason the TurboTax program prompts for Employee stock (ESPP, NQSQ, ISO, RSU, etc.) is to make sure you look in all the right places to accurately calculate your cost basis and holding period.