How do I adjust the cost basis for an NQSO sale that was also reported on my W-2?
Oftentimes, the cost basis of an NQSO sale reported on a 1099-B doesn't include the stock's discount (compensation). If the compensation was reported on your W-2 (box 12, code V), you could be paying more taxes than you need to.
Here's how to fix that when you enter the sale from your 1099-B form:
- On the Tell us about your [company name] 1099-B screen, make sure you've selected I'll enter one sale at a time.
- Enter the cost basis (box 1e) from your 1099-B, even if it's wrong. We'll correct that in Step 3.
- Select I'll enter additional info on my own button.
- On the following screen, enter the actual cost basis in the Corrected cost basis field.
- For example, if your W-2 has $7,000 in Box 12 with a code V (the correct basis) and your 1099-B shows an incorrect cost basis of $3,000, you'd enter $7,000 in the Corrected cost basis field.
- Select Done and the transaction will now reflect the corrected cost basis.
A same-day (cashless) NQSO transaction will usually net out to a small loss, representing the commission and fees associated with the transaction.