ThomasM125
Expert Alumni

Retirement tax questions

I believe what you mean is you acquired stock in the company you worked for but did not purchase it. If so, it would be considered employee stock. Depending on what type of employee stock it was, there may have been income associated with the value of the stock reported in box 1 on your W-2 form in the year you acquired it or in the year you sell it. If so, you can include that income in the cost basis of the stock when you report it's sale. The Form 1099-B may not report the correct cost basis, as it often simply reports what you paid for the stock, if anything. If you were taxed on the discount you received that allowed you to acquire the stock for little or no money, that income would be reported on your W-2 form, and that would get added to your cost basis in the stock.

 

You may have to inquire about this from your employer or look on your W-2 form in the current year or years past to determine what the income reported was. You will also need to determine what type of employee stock was sold, incentive stock options, non-qualifying stock options, employee stock purchase or restricted stock units or awards. It is less important to correctly identify the type of employee stock it was than it is to not indicate that it was employee stock that you sold.

 

You may receive a form 3921 Exercise of Incentive Stock Option reporting information you will need to determine the proper treatment of the stock sale. If you choose one of the employee stock options when you enter your form 1099-B, you will see an option to enter the form 3921 information in TurboTax.

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