How do I fix the 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 (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:

1. Open or continue your return.
2. On the Did you have investment income? screen, select Yes.
3. On the Let's import your tax info screen, select Enter a different way.
4. On the OK, let's start with one investment type screen, select Stocks, Bonds, Mutual Funds, and select Continue.
5. On the Which bank or brokerage is on your 1099‑B? screen, enter your info and select Continue.
6. On the Tell us about the sales on your 1099‑B screen, select Yes when asked Do these sales include any employee stock? Answer the rest of the questions and select Continue.
7. Continue through the screens, and on the Now, we'll walk you through entering your sale details screen, fill out the fields and select The cost basis is incorrect or missing on my 1099‑B and Continue.
8. On the Adjust your cost basis to ensure your best outcome screen, select I found my adjusted cost basis and enter the correct cost basis from your W-2 (box 12, code V).
   • If you have more than one sale on your 1099-B, you may want to reference the supplemental statement provided by your broker that shows the Box 12, Code V amount by individual sale, rather than the one amount on your W-2.
9. 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.