A couple of comments:
- If you have a qualifying disposition, and the stock is sold at a loss, there is no ordinary income recognition of the bargain element.
- Your facts are not entirely clear, but if the bargain element is included in your W-2, which many times it is, then you need to contact the employer to have them issue you a corrected W-2.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
