I worked for a company that was purchased and I had shares vested to me, these were bought and sold same day. the amount of the sale in addition to the taxes taken at the time are included as income and taxes on my w2 from this company. what is necessary for reporting this?
Yeah...one other thing.
You will likely get a 1099-B for that stock sale (sometime in February) from whatever financial institution handled the sale. And you will enter that exercise as a sale of stock.
....BUT it is important to note...that since the gain on that sale was noted and entered as part of your W-2, for the stock sale, you will update the basis on the date of the sale...to the price on the date of sale. Result is zero gain...(to small loss due to brokers fees). The IRS will expect to see that information on your tax return. Taxes were withheld on yoru W-2 for that income...but when entering the stock sale in the stock sale area...do not indicate in that area that taxes were withheld...they are already on your W-2 entry.
A full explanation of your procedure is shown on situation #2 here:
You will also need to be using the Premier, or H&B software to enter this data. Deluxe or Basic will no longer handle stock sales.
Thank you for explaining this. I have a different twist on this same situation. On my 1099-B, my cost basis and proceeds are very different. Everything else is the same and the W2 reported the income and I paid taxes on the money. For some reason I feel like I need to report the gain, but that doesn't make sense. Feedback is appreciated. Thanks, Bob
UNLESS you sold the stock on the same day as you exercised the options it's unlikely that your proceeds and basis, (and I'm talking about how you report the trade on your income tax return, not how the broker reports the trade), would be the same. The amount you paid for the exercise of the stock plus the compensation resulting from the exercise are your basis for all the stock received. Since the compensation is calculated as: FMV of stock at exercise minus the amount you paid to exercise, you can see that only if the sale date and the exercise date are the same is it likely that proceeds = basis.
Even if you had a same day sale it's certainly possible that the broker reported a basis that amount to only what you paid for the stock, in which case you'd have to report a basis figure different than the broker reported.
Thank you for explaining. It's becoming less muddy...a little. The 1099B is what confused me as it has me taking on a huge gain. The Supplemental Stock Plan Lot Detail makes a lot more sense and my cost basis and proceeds are only different because of commissions and a wash sale.
I also want to thank you for this information. I am wondering how I enter this within TurboTax (or directly on the tax forms). My W-2 has the info you refer to, and when I subtract the value I netted from the sale by the value on my W-2 I do have a small loss ($50 or so). Does this information just go onto the Schedule D form as one line item? I actually had a total of three transactions last year, but my W-2 just has the total from the three transactions not the individual transactions. Therefore, I am not sure how I enter the dates that you mentioned from your above example or from the example in the link you referenced.
This method of entering the cost basis to be the same is the easiest. However I did come across another article from TurboTax advising to enter 1099-B info as-is then go on completing the additional interview section. I've tried it for one transaction and calculation results in zero gain, which is the same. I'm wondering if TurboTax will send the same info to the IRS or different.
Since this deal was consummated in a takeover situation it's probable that you won't get a 1099-B as it's unlikely that a broker was involved in the sale. Even if a broker was involved in the sale there's a possibility that you won't get a 1099-B as they are not required in "same day" vesting/sale situations, meaning you don't have to report sales in this situation, (though you might wish to anyway if fees were taken out.)
You probably can ask your employer if any official 1099-B's will be issued. If they aren't, then you are done when you enter your W-2.
Tom Young