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Author: yenomit Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121317  
Subject: Re: Incentive stock: capital or compens? Date: 3/7/1998 9:49 PM
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Kat

[The main point is that a 1099-B doesn't report *gain* -- it merely reports
the amount your received on the sale. The brokerage firm was correct to file the 1099-B, and it
*will not* cause you to be taxed twice.

....


Here's an example with some made up numbers.


Your employer should report $1,000 of compensation income, and you pay tax on that amount. In
addition, the broker sends you a 1099-B showing you sold stock for $3,000. On Schedule D you
report that you received $3,000 proceeds from the sale of stock. And you show your basis in the
stock as $3,000 (the $2,000 you paid plus the $1,000 that was taxed as compensation). You have
zero gain on this part of the transaction and no tax. You're only taxed once, on the $1,000 of
compensation. There may be a small variation between the amount reported as income to you and
the net sale proceeds, so you may have a small gain or loss, but nothing is taxed twice.]

Ok, that makes sense. I think I was thrown because (a)
I've tried using TurboTax for the first time instead of reading the forms and (b) I assume no one _ever_ sends a financial form unless it relates to the IRS <g>.

[ In the category of tax trivia, the "deferred compensation" box on your W-2 shouldn't have anything
to do with this, but instead indicates you made an elective deferral to a 401k plan or similar plan.]

Got it - it must refer to the 401K amount in Box 13; I was confused since I assumed the Deferred Comp box was _under_ Box 14, instead of extended across.

Thanks again

Dave

(Nerz! Now I really do owe all that tax! <g>)


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