Oftentimes, the cost basis of an NQSO sale reported on a 1099-B doesn't include the stock's discount (also called the compensation). If the compensation was reported on your W-2 in box 12, you could be paying more taxes than you need to.
Here's how to make sure the cost basis is right when reporting the sale from your 1099-B:
- On the Let's get the details about this sale from your 1099-B screen, select Nonqualified Stock Options (NQSO) from the first dropdown at the top.
- Fill out the other fields on that screen, and when you get to the last field for box 1e, enter the cost basis from your 1099-B and be sure to put a checkmark in the cost basis is incorrect right below it. Then continue.
- On the following screen, select the middle option, I know my cost basis. Then enter the correct cost basis from your W-2 (the box 12, code V amount).
- Select Continue 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.