Here is information on Stock Options that may answer your questions: IRS Topic - Stock Options . If you receive an option to buy stock as payment for your services, you may have income when you receive the option, when you exercise the option, or when you dispose of the option or stock received when you exercise the option. You should have further discussions with your employer to determine the type of stock options being provided to you and also how the employer is reporting this information to you (for example, including amounts into your W-2, etc.). This information will assist you in determining when and how the income will be reported to you.
Once you sell the stock, the amount that you already paid taxes on will become the basis for your stock. This amount will be reported against the sales price to determine the gain or loss on the sale of the stock.
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