So it depends, If this income reported on that W2 is called the "bargain element" which is typically taxed as ordinary income.This is the difference between the grant price and the exercise price on the day you buy the options. If you subsequently sell the stock you exercise you will report a short term gain or long term gain with the commissions reported as a short term capital loss. Remember, the cost is the bumped up exercise price on those grants and the sale is reported on that Sch D. If no sale was associated with this transaction, then the commissions would not be deducted as this investment expense is no longer accepted as a miscellaneous itemized deduction. See HERE Scenarios 1&2 for further detail regarding your particular situation.
Lots of Luck.
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