Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
I'm confused! I sold some of my company issued options a month after recieving them. I recieved the net pay of about $535 from the company broker, but the total sale was $2270 (original cost of options was therefore $1735).

Now that tax session has arrived, I recieved my W-2 form that includes the $535 I recieved for my options. The company book keeper said that's how these earnings are reported, as part of my W-2 income. Sounds fine to me. BUT, now I've recieved a 1099-B from the broker ("Proceeds From Broker And Barter Exchang Transactions") stating the $2270 amount under Stocks, Bonds, etc.. I called the broker, who said just to keep it for my records. But on the back of the 1099-B statement, it says I have to claim it on a Schedule D form. What the heck?!?

Whats a tax payer to do? How can I claim this amount? I never recieved this amount. I was aready taxed on it through my W-2 income amount. Is anyone out there familiar with this situation? I would appreciate any advice.
Print the post Back To Top
No. of Recommendations: 0
I'm confused! I sold some of my company issued options a month after recieving them. I recieved the net pay of about $535 from the company broker, but the total sale was $2270 (original cost of options was therefore $1735).

Now that tax session has arrived, I recieved my W-2 form that includes the $535 I recieved for my options. The company book keeper said that's how these earnings are reported, as part of my W-2 income. Sounds fine to me. BUT, now I've recieved a 1099-B from the broker ("Proceeds From Broker And Barter Exchang Transactions") stating the $2270 amount under Stocks, Bonds, etc.. I called the broker, who said just to keep it for my records. But on the back of the 1099-B statement, it says I have to claim it on a Schedule D form. What the heck?!?

Whats a tax payer to do? How can I claim this amount? I never recieved this amount. I was aready taxed on it through my W-2 income amount. Is anyone out there familiar with this situation? I would appreciate any advice.



You will need to fill out Schedule D and show a short term transaction with proceeds of $2270 and a cost basis of $2270 (and therefore $0 gain). This has zero impact on taxes due, but will satisfy Big Brother watching over your shoulder to make sure that the total proceeds YOU report jive with the 1099-B numbers from your broker.
Print the post Back To Top
No. of Recommendations: 0
[[I'm confused! I sold some of my company issued options a month after recieving
them. I recieved the net pay of about $535 from the company broker, but the
total sale was $2270 (original cost of options was therefore $1735)]]

I can only assume that you are talking about non-qualified stock options. You might want to go to the Taxes FAQ area and see how those type of options are taxed. You may answer your own question. In addition, you should really read the summary of your option plan, which should lay this all out for you. Check with your benefits people.

[[ Now that tax session has arrived, I recieved my W-2 form that includes the
$535 I recieved for my options. The company book keeper said that's how
these earnings are reported, as part of my W-2 income. Sounds fine to me.
BUT, now I've recieved a 1099-B from the broker ("Proceeds From Broker
And Barter Exchang Transactions") stating the $2270 amount under Stocks,
Bonds, etc.. I called the broker, who said just to keep it for my records. But on
the back of the 1099-B statement, it says I have to claim it on a Schedule D
form. What the heck?!?]]

Right...you want to show Uncle Sammy that you made the sale. But it is very likely that your cost basis in these shares would include what you originally paid for them ($1,735) PLUS what was subject to tax on your W-2 form ($535)..which give you a basis of $2,270..which means that you have NO gain OR loss on the sale of the shares. But you STILL want to report the sale on your Sch D.

TMF Taxes
Roy

Want to learn more about taxes and investing? Then we have a deal for you!!
The Motley Fool Investment Tax Guide is now available through Fool Mart. Be
the first one on your block to own this masterpiece. It'll help you with your 1998
taxes, and it's never to early to start planning for your 1999 taxes. So just click
on this link (http://www.foolmart.com/market/product.asp?pfid=MF+013+I) to
read more about this amazing collection of tax information. (Apologies for the
shameless plug…but it is a pretty good book…if I do say so myself). In
addition, if you would like to visit the Taxes FAQ (Frequently Asked Questions)
area, click on http://www.fool.com/school/taxes/taxes.htm and you'll be right at
the home page. Check it out. Finally, if you need to get to the IRS web site,
click on http://www.irs.ustreas.gov to go directly there.
Print the post Back To Top
No. of Recommendations: 0
The information
"You will need to fill out Schedule D and show a short term transaction with proceeds of $2270 and a cost basis of $2270 (and therefore $0 gain). This has zero impact on taxes due, but will satisfy Big Brother watching over your shoulder to make sure that the total proceeds YOU report jive with the 1099-B numbers from your broker." Was correct.

I found the conformation in an IRS publication

See IRS Publication 550

Page 19-20

Distributions of Stock and Stock Rights

Hope this helps - it did for my return
Print the post Back To Top
Advertisement