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Almost right. There's the ordinary income, reported on the W-2, for the difference between the strike price and the price at the time the option is exercised.

There's also the 1099 gain (or loss) on the difference in the stock price between the time of the exercise and the time of the actual sale. This difference is usually quite small (maybe zero), but on a volatile stock it usually won't be. There's some delay in the system because the broker has to wait for the issuing company to award the shares before it can sell them.
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