I left a company and months later exercised my NSOs. It was a cashless exercise where I used some of the shares to pay the cost and tax withholding. My company uses Carta.
For example. I exercised 1000 options at 0.1 per share. FMV was 0.5 per share. I used 300 shares to cover the purchase costs. And 100 shares to cover the estimated tax withholding. leaving me holding 600 shares. (This math doesn’t work but go with it)
It sounds like I owe income tax on the $400 gain from the initial exercise. (.5 - .1) x 1000?
Do I also have a short term capital loss on the sale of the shares to cover the costs and taxes? (400 x .5) proceeds - ((400 x .1) cost + $400 w-2 income)
200 - 40 - 400 = -$240 loss?
None of this was reported on my W-2. Should it have been? They withheld (actually I paid) taxes but I don’t have a breakdown of amounts that went to federal, state, Medicare, etc. Should I?
I was granted the options while employed but exercised them after I left.
Should I get a 1099-B from Carta for any of this? I’m thinking I might for the sale of shares to cover the costs and taxes?
I’m the first employee to leave and exercise their options. Those still employed haven’t exercised yet either since there’s a 10 year deadline that hasn’t come yet and the company is still private. So I’m guessing my former employer might not know they need to report this on my W-2?
If they don’t issue a corrected w-2 how do I report the income properly? How do I report the taxes already paid? Anything else I need to consider or have got wrong here?
