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Sunshine 58
Level 2

I'm I able to avoid the double tax on the sale of my stock options

My W-2 wages includes an amount in box 12 with code V (income from exercise of nonstatutory  stock options) of $17,088.60.  The federal taxes paid on these options also appear on my W-2.  The options were granted to me at no cost on 9/1/2010.  I have sold the same type of options in previous years using TT with no issues.  The only thing different in 2020 is that the brokerage house has changed and I am now able to download the 1099 from the new brokerage house.

When I download the option from my brokerage account the income is appearing from my W-2 and in schedule D.  How do I correctly list this amount?

If I go into TT and choose yes, this is stock that was acquired through an employee stock purchase plan and on the next screen choose NQSO, same day sale, date sold 6/1/2020, sold 100 shares, the total proceeds screen tells me 100 shares x $199.93 ( selling price per share) = $19,993 (total proceeds), from one grant lot, next screen exercise price $200.00, options granted 9/1/2010, 100 shares exercised, next screen net sales price $19,993, price paid $20,000, compensation income 0, cost basis = $20,000.00  - $20,000, short term loss = -$7.

When I do the review it says 1099-B worksheet line 18 column e should not be more than the FMV/share on exercise date.  It lists e exercise price per share box 3 200.00, g fmv/share on exercise date box 4 199.93.

The 1099 lists box 1A – (the company name), quantity sold – (100), date acquired box 1b – (6/1/2020), date sold box 1c – (6/1/2020), proceeds box 1d ($19,992.60), cost or other basis box 1e – ($2,904.00),

Box 1f – (0), box 1g – (0), gain amount $17,088.60.

 

Looking at the brokerage sale paperwork it says – trade date 6/1/2020, quantity 100, price $200.00, principal $20,000, commission $6.95, fee $0.45, net amount $19,992.60.

 

To me everything appears correct except I get the error on the federal review.

3 Replies
ThomasM125
Expert Alumni

I'm I able to avoid the double tax on the sale of my stock options

You need to adjust the cost basis reported on your form 1099-B by adding the income reported on your W-2 for the options. You will see an option to make an "adjustment to gain or loss" on your form 1099-B entry in TurboTax. Use that to increase the basis reported on your form 1099-B:

 

 

 

You may also see this screen, where you can select The cost basis on my statement is incorrect:

 

 

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Sunshine 58
Level 2

I'm I able to avoid the double tax on the sale of my stock options

Thank you for your reply.  I tried to follow your instructions.  Please let me know if what I did is correct?  When I add the transaction, I did that by hand, not by downloading from the brokerage house.  When I get to the 1st screen shot below I put total proceeds $19,992.60, cost basis $20,000.00, box A short term covered and I have no additions for box 1f or 1g.  I am then done no further questions, I never get to the 2nd screen shot and I do not have any issues on my federal review.  When I did this it never asks me if this is a NQSO.  Is this an acceptable method for the transaction to be listed?

DawnC
Expert Alumni

I'm I able to avoid the double tax on the sale of my stock options

As long as the compensation is included on the W-2 and you have adjusted the cost basis on Schedule D when calculating the short-term gain or loss, the tax effect will be the same.     See Example 2 from Non-Qualified Stock Options, it is very similar to what you have.  A same-day sale should end up with a small loss as you have.    

 

If you have entered information for different lots in the past, that info should be saved for you there if you go through the employee stock interview.   But you don't have to use it if you have all of the information.   

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