So, having received no input on this board, I sought further professional opinion and all 3 tax consultants confirmed that despite my non-employee status with the company, the exercised shares were given when I was an employee and therefore is still viewed as earned income (compensation) subject to SE taxation, which generates a large tax consequence for me. Next time I exercise shares, I will know what I need to pay up on with respect to SE taxes.
I can confirm for anyone interested that using the supplemental information provided by E-trade over and above their 1099-B gave me the critical info related to adjusting the cost basis, which TTax correctly calculated for all my RSU's, but was a bit off on the adjusted cost basis for my NQ sales and by over-riding those values in TTax and inserting the E-trade data, I was able to reduce my tax burden by about $2000. It is extremely critical that people use the supplemental data provided by your broker to make sure you are entering in the correct cost basis, which often is not correct on the 1099-B. You do have to enter that 1099-B value initially which is reported to the IRS but further down on the form, it can be adjusted using the broker supplemental information and should be done so or you may be paying too much tax.
