Exercised NQSO (grant) in 2024. Holding most shares but sold some share to 'Sell-to-Cover'

[Vipul]

hello,

I exercised a Non Qualified Stock Option grant (NQSO) that resulted in a 'Sell-to-Cover' shares of stock to cover the taxes that were due for the options I was granted.

Exercise was done on January 10th in 2024 and the grant was awarded to me in 2014 by my employer. 

Here are the details:

Grant Type: Nonqual
Grant Price: $10.00
Sale Price: $24.00
Exercise Market Value: $24.99
Shares Exercised: 160
Shares Sold: 52
Shares Issued: 108

Total Gain: 728 (24-10 X 52) + 1618.92 (24.99-10 X 108) = $2346.92

This number ($2346.92) was reported on my W2 in box 12 with a code 'V'.

1099-B I received from the broker has the following:

Quantity: 52
Date Acquired: 1/10/2024
Date Sold: 1/10/2024
Proceeds: $1248 (24 X 52) - Commission ($5) = $1243
Cost Basis: $520
Gain/Loss Amount: $728

I also received a 'Stock Plan Transactions Supplement' from the broker that has an 'Adjusted Cost Basis' for this transaction of $1248 and an associated 'Adjusted Loss' of $5.

I have the following questions:

1) Do I report the sale of 52 shares as NQSO in the 'Sales info' section?
2) Do I enter 'Cost Basis' of $520 along with all the other sale details?

3) Do I select 'The cost basis is incorrect or missing on my 1099‑B' and then on the next page (Adjust your cost basis to ensure your best outcome) enter $1248 as the 'Adjusted Cost Basis'?

OR

3) Do I select 'The cost basis is incorrect or missing on my 1099‑B' and then on the next page (Adjust your cost basis to ensure your best outcome) enter $2346.92 as the 'Adjusted Cost Basis'? This is per Intuit article - https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-forms/fix-basis-nqso-sale-also-repor... (How do I fix the basis for an NQSO sale that was also reported on my W-2?)

[DavidD66]

You have all the information you need to correctly report the sale of stock from your NQSOs.  Therefore, I recommend you don't indicate in the program that it is "Company Stock".  You don't need to go through the extra questions.  Enter the transaction exactly like it is reported on the Form 1099-B.  After entering, select "The cost basis is incorrect..." and enter the correct cost basis, which is the amount you paid ($10 per share) plus the amount that was added to your W-2 as wages, plus the commission.  That's it.  

[Vipul]

Thank you for a quick response.

Just to be clear, you are suggesting the following:

1) Not selection NQSO in the 'Sales info' section.  How does this affect reporting of the sale?

2) After entering, select "The cost basis is incorrect..." and enter the correct cost basis, which is the amount you paid ($10 per share) plus the amount that was added to your W-2 as wages, plus the commission.

So the 'Adjusted Cost Basis' would then be:

Amount I paid (52 X 10 = $520)  + Commission ($5) + W2 Section 12 'V' ($2346.92)

Which would be $2871.92

Do you mind helping me understand the logic here?

[ThomasM125]

By not selecting NQSO in the sales option it may make it less complicated to report the sale of company stock, as you may need to enter less information. But you can select that option if you want.

It seems you sold all of the shares that were issued, so the cost of the shares for tax purposes when you report their sale would be what you paid for them, plus the commission and plus the income assigned to you on your W-2. The total gain is what you sold them for less what you paid for them. Part of that is reflected on your W-2 form as wage income so the rest is reported when you enter the 1099-B form in TurboTax. So, the sales proceeds less the wage income less the commission expense less what you paid for the shares will be your capital gain income.