Exercised NQSOs. 1099 cost basis doesn't reflect compensation element. Do i manually enter ONLY W2 box 12- V or do I ADD that amount to cost shown on 1099 too? @TomYoung?

Forum|Forum|7 years ago
June 1, 2019
6 replies
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TurboTax Premier Online

Best answer by TomYoung

The broker's 1099-B should be reporting only your " out of pocket" cost to acquire the stock you're selling, i.e. (# of shares sold) x (exercise price per share). To that you want to add the compensation cost for the shares sold created by the exercise of the NQSO.

If you happen to be selling ALL the shares received in the grant, (we're talking about the GROSS number of shares stated in the grant, before shares are sold or withheld for taxes or exercise), then you could simply add the Box 12 compensation amount to the 1099-B amount.

In the more likely and more common situation where you are selling less than the GROSS number of shares, you add a the compensation element for only the number of shares sold.

So, for example, if the gross number of shares in the grant was 80 and the associated Box 12 amount was $640, then the"per share" amount would be $8. And if your sale was for 20 shares you'd add $160 to the 1099-B amount.

GabiU

Level 13

@TomYoung 🙂

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T

TomYoung

Answer

Alumni - Champ

The broker's 1099-B should be reporting only your " out of pocket" cost to acquire the stock you're selling, i.e. (# of shares sold) x (exercise price per share). To that you want to add the compensation cost for the shares sold created by the exercise of the NQSO.

If you happen to be selling ALL the shares received in the grant, (we're talking about the GROSS number of shares stated in the grant, before shares are sold or withheld for taxes or exercise), then you could simply add the Box 12 compensation amount to the 1099-B amount.

In the more likely and more common situation where you are selling less than the GROSS number of shares, you add a the compensation element for only the number of shares sold.

So, for example, if the gross number of shares in the grant was 80 and the associated Box 12 amount was $640, then the"per share" amount would be $8. And if your sale was for 20 shares you'd add $160 to the 1099-B amount.

C

ceceliaAuthor

Level 2

TomYoung, I just knew you would know the answer to this -- thank you! Exactly the information I needed!  I read somewhere that I should combine my out of pocket costs with the compensation element.   But I'll use the compensation element on W2 Box 12 -V only for the shares I sold. I think I can figure that out by looking at the 1099, adding up total sold (& the gains.)

Complicating matters...  my 1099 shows that when I sold stock it was AFTER I exercised.  You see, I did not conduct a cashless exercise. I paid cash up front to exercise and then took the cash back based on what i needed to pay myself back the cash.

And there were TWO transactions that I conducted to get my cash back:
one is short term cover securities (exercised 300 options acquired 6/18 and sold stock in 8/18)
one is long term covered securities (about 120 stock options acquired 3/17 acquisition date of stock, sold also on 8/18)

Maybe I should enter these transactions separately in Turbo Tax vs. summarizing?  Then adjust the cost basis for each transaction using the compensation element + out of pocket for each. What do you think?

D

DavidD66

Level 15

Your adjusted cost basis is the exercise price, which should be the amount on your 1099-B plus the bargain element, which is the amount reported in Box 12 -V. You have to adjust the cost basis of the stock as shown on your Form 1099. You will have to enter the 1099-B to account for any capital gain or loss as well as adjust the cost basis to reflect the amount reported on your W-2. To enter your 1099-B, go to:

Federal Taxes
Wages & Income
Investment Income
Stocks, Mutual Funds, Bonds, Other
Answer Yes you received a 1099-B
Do not enter your broker-dealer name and download your 1099-B, instead,
Click on "I'll type it in myself"
Enter your Broker and click Continue
Indicate the type of trades you have on your 1099-B (A, B, D, E, X)
Enter the details of your transactions as reported on your 1099-B THEN
Check the Box for "This sale involves an employee stock plan (including ESPP) or an uncommon situation". Additional information will appear. Click on Start Now
Indicate "I have sales from an Employee Stock Plan, including ESPP, NQSO, ISO, RS, and RSU"
Follow the instructions for the type of employee stock plan you have. Additional information on these plans is available by clicking the blue Learn More link