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kjaassoc
New Member

Do I need to report the exercise of a vested non qualified stock option as a consultant where the exercise price is the same as the FMV (as stated by the company)?

It seems that if there was any differential between the exercise price and the FMV the company should have reported income in box 3 of my 1099. However, since the company stated at the time of exercise the FMV was the same as the exercise price, there was no additional income reported to me.
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Accepted Solutions
TomYoung
Level 13

Do I need to report the exercise of a vested non qualified stock option as a consultant where the exercise price is the same as the FMV (as stated by the company)?

If the real FMV of the company is the same as the exercise price - you paid that exercise price, right? - then you have no compensation, no revenue to report.  You simply bought a stock.

Of course if the IRS ever asks you've got to be able to back up that position and I don't know that "the company stated" you paid the FMV of the stock would stand up without some appraisal or other attempt to support that notion.

Tom Young


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4 Replies
TomYoung
Level 13

Do I need to report the exercise of a vested non qualified stock option as a consultant where the exercise price is the same as the FMV (as stated by the company)?

If the real FMV of the company is the same as the exercise price - you paid that exercise price, right? - then you have no compensation, no revenue to report.  You simply bought a stock.

Of course if the IRS ever asks you've got to be able to back up that position and I don't know that "the company stated" you paid the FMV of the stock would stand up without some appraisal or other attempt to support that notion.

Tom Young


kjaassoc
New Member

Do I need to report the exercise of a vested non qualified stock option as a consultant where the exercise price is the same as the FMV (as stated by the company)?

Thank you for the quick response. Yes I paid the exercise price. The company also sold common stock for the same price/share as the exercise price around the time of exercise so that seems to validate the FMV.
darewreckk
Returning Member

Do I need to report the exercise of a vested non qualified stock option as a consultant where the exercise price is the same as the FMV (as stated by the company)?

What if the 409A expired and no new grants or stocks have been awarded.  Would the FMV still hold true? And if not, would you be penalized?
darewreckk
Returning Member

Do I need to report the exercise of a vested non qualified stock option as a consultant where the exercise price is the same as the FMV (as stated by the company)?

What if the 409A expired and no new grants or stocks have been granted.  In the case of a private company that isn't public.  Would the FMV still hold true? And if not, would you be penalized?
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