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Get your taxes done using TurboTax
Thanks so much @RaifH.
Your response is clear that reporting is required.
The crux then, is that my employer reported the taxes withheld and Morgan Stanley did not. My 1099-B shows the cost basis (Short Term - Covered Securities (Part I, Box A)). It does not reflect taxes paid. By entering the 1099-B as is, I'm effectively double reporting my income as a result of the NQSO sale (W-2 and 1099-B), but only single reporting taxes withheld (W-2 only). As a result, a significant tax consequence would be realized.
I am able to follow steps 1-3 outlined, but the cost basis IS reported on my 1099-B and has been reported to the IRS. How am I able to adjust the cost basis to avoid the double reporting on the income while still ensuring I am aligned with the 1099-B?
Do I need to work with my employer and/or Morgan Stanley to obtain appropriate forms?