From my understanding, on W-2 Box 12-V this amount is already included in Gross Earnings in Box 1 of your W-2. The amount of 12-V equals the "Gain" of the sale from the NQ Stock Options exercised in a trade "Proceeds - Cost Basis". My employer has also withheld Fed Tax, and FICA from the amount reported in 12-V. However, in TurboTax if you use the Proceeds minus cost Basis as reported on the Stock Trade Company's (Charles Schwab, Morgan Stanley, etc.)1099-B , then you will have the gross Gain added to your Income as Capital Gains Income on the 1040 Line 7 which will increase your Adjusted Gross Income and thereby get taxed a 2nd time for the Capital Gain amount.
So, how does TurboTax "wash" the 1099-B Short Term Capital Gain, as shown when it as Reported in your tax return, but NOT add any additional amount to your Gross Income? From your example, do you make the "Cost" amount the same as the "Proceeds" and get a net "Zero" capital gain? Does the IRS then reconcile this from Form 8949 report as zero capital gain increase and compare what the 1099-B from the Stock Trade Company reported with your W-2 Box 12-V and fulfill the reporting and tax requirements? Or is there something else that needs to done?
