Brokerage lists gross sales from stock option exercise with no cost basis or tax withheld which are not accurate, and refers to Form 8949 but I can’t find?

[timbukktoo]

I was sent a tax sheet from Merrill Lynch that merely listed sales proceeds of $15000 as sales proceeds, with no tax withheld.  It says "see Form 8949" but I couldn’t find this in Turbotax software.  The $15000 is actually the gross value of the stock exercised, but does not take into account how much the cost of the stock was for me to purchase, and the fact that taxes were actually withheld for the net transaction as indicated in my company W-2.  I’m concerned that I wasn't able to address this Merrill Lynch info or Form 8949 in my tax return, and that this $15000 somehow will be associated with my return with no withholding when it actually was addressed by my company’s W-2.  Should I just ignore it or is there something I need to do to fix this?

[DDollar · Accepted solution]

You do not want to ignore it. If you do that, the IRS will assume you had a short term gain of $15,000.  You have to enter the information on your Form 1099-B you received from your broker as reported.  However, you will need to made an adjustment to the Cost Basis in the entry section so that your cost basis reflects both the strike price (the amount you paid to exercise the options) plus any additional amount you were tax on.  For example: if you paid $10 per share, and the stock was trading at $15 per share, you would have had $5 of income added to your W-2 as taxable wages.  Therefore, you adjusted cost basis is $15.  If the shares purchased were then sold for $15.25, you would have a $0.25 gain.

Form 8949 is created by the program when you enter the sale of investments.  After entering the transaction, you can view the form in "Forms" mode.

[timbukktoo]

Thanks for your valuable inputs!  I finally figured out how to input all of the info in but had to upgrade first from deluxe to premium Turbotax download (+$30 plus tax:-) in order to facilitate the process.  On premium version, I was able to locate where to provide information that this was a NQ stock option exercise.  Bottom line is that I had some reduction in taxes due as a result of being able to identify brokerage fees charged to me on this transaction.  Noteworthy is that the program pre-populated the precise amount as a “sales expense” despite my brokerage records that identified it as “fees and commissions”.  On Turbotax, I initially zeroed out the sales expense and put it in as a fees/commission but it doubled the amount of charges and rang out as an error.  I decided to zero out the fees/commission amount and leave the amount in as a “sales expense” and it worked fine from there.

[taxforramsey]

How do I get Form 8949.

[WendyN2]

There are two ways to do this. I provided a link just in case the step by step process below does not work. I've tested the links, but just in case:

  1.  Importing Form 8949 Into TurboTax

  2. TurboTax will automatically generate Form 8949 when you report the sale or disposition of capital assets. For example, when you enter stock sales reported on Form 1099-B, TurboTax will generate the 8949. 

For more information, including how to determine the cost basis of a stock, please see the FAQs below.

To enter Form 1099-B in TurboTax Online:

• Open (continue) your return in TurboTax Online. (If your return isn't open, you'll need to sign in and click Take me to my return.)
• Click the drop-down arrow next to Tax Tools (lower left of your screen).
• Select Tools.
• In the pop-up window, select Topic Search.
• In the I'm looking for: box, type 1099-b.
• In the results box, highlight 1099-b, then click GO.
• You'll land on Did you sell any investments in 2016? Click Yes.
• Follow the onscreen instructions. You'll be able to enter the 1099-B info yourself or import it if your brokerage participates in the TurboTax Partner program.

How do I find a stock's cost basis? https://ttlc.intuit.com/replies/3300454

What is Form 8949? https://ttlc.intuit.com/replies/3300671

What is a 1099-B?  https://ttlc.intuit.com/replies/3301629