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I can't imagine this question hasn't been asked before, but I must apologize that I can't find the thread.

The company enforces trading blackouts (to protect employees from trading too close to earnings release and being accused of insider activity). However, exercise of options is permitted, but the shares must be held. They cannot be sold during the blackout. Well, I ended up with some NQSOs expiring during a blackout period last year, so had to buy them (they were above water).

The company further reports W2 income for such transactions, showing up in box 12 of the W2. Given that I did not sell the shares, there is only the gain reported as W2 income already. Therefore I don't need to report these on schedule D (until such time as I sell them). Correct?

1poorguy
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The company further reports W2 income for such transactions, showing up in box 12 of the W2. Given that I did not sell the shares, there is only the gain reported as W2 income already. Therefore I don't need to report these on schedule D (until such time as I sell them). Correct?

Correct. The difference between FMV and the option strike price is ordinary income, and reported on your W-2. Now you own the stock with that FMV as the basis, and and gain/loss from that number when you sell will be on your Schedule D.
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Cool. Thanks for confirming for me.

1poorguy
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