Thank you so much for replying, @hbl3973. I really appreciate it.
What I hear you saying is: the sale itself should be breakeven, since the cost basis was $50k, but I should be taxed $40k for exercising the shares (since the strike price was $10k and the FMV was $50k). Is that correct?
My concern is that I do not appear to have $40k tax liability showing up anywhere in my forms.I realize it is mentioned in the middle of the Easy Step process as "compensation income", but if I delete the investment account from Turbo Tax (on the screen: "Here's all the investment accounts we have so far", where it lists the gain/(loss) as 0.00), there's no change in my overall federal tax liability (i.e., in the upper left "Federal Refund" box).
This is the heart of my concern. Shouldn't I have some net tax liability from this whole transaction that shows up in what I owe? I can't believe that I exercised my options for $10k, sold the shares the same year for $50k, and have no tax liability showing up in Turbo Tax after following the steps I outlined. I thought I would owe taxes on the $40k, but the liability does not appear to be showing up anywhere. Am I missing something?
