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calculating employee stock options

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lennstrom14

Junior Member
What is the name of your state? new york
please help in determining how to report loss on schedule d ..
w2 is coded with "V" income from exercise of non statutory stock options .
i received confirmation statement from employer this is what forms show ...
#1 cinfirmation statement :
you sold 223 at price of 50.48
citigroup exercise and sell
grant price 32.2219
option cost : 7,185. 48
gain at 50.48 4,071.56
federal tax 1017.89
fica tax 1 252.44
fica tax 2 59.04
state tax 299.26
other fee .35

gross amount 11,257.04
total exercise cost 8,814.46

net amount 2,442,58
settlement date 10/10/06

form says you will not receive a schedule b --you should report loss realized on this sale on part 1 sched d as short term cap loss ..the trade date is date aquired and date sold ...i assume that is 10/10/06 settlement date ...is this correct?
it says gross amount of trade (before exercise costs ) should be cost basis ..gross amount less any applicable brokerage fees ( including commission ,transaction fee ,other fee and exercise fees ) should be used as sales price ..the difference should be shown as a loss...

would this be correct : cost basis 11,257.04
sales price 8,814.46
short term cap loss 2,442,58
thanks for your help ....
 


efflandt

Senior Member
Why do you think you had a loss? It appears that you exercised an employee stock option on 10/10/06 for an immediate gain.

Cost basis: $7,185.48 (223 shares bought at $32.2219)
Sale price: $11,257.04 (223 shares sold at $50.48)
Short term gain: $4,176.56

$2442.48 is the positive cash you received after tax withholding.
 

LdiJ

Senior Member
Why do you think you had a loss? It appears that you exercised an employee stock option on 10/10/06 for an immediate gain.

Cost basis: $7,185.48 (223 shares bought at $32.2219)
Sale price: $11,257.04 (223 shares sold at $50.48)
Short term gain: $4,176.56

$2442.48 is the positive cash you received after tax withholding.
I agree, however it may already be taxed. If the W2 reflects the entire sales proceeds, then the gain has already been taxed. Therefore reporting the gain on schedule D would be double taxing the gain.

In that case, in order to reflect the 1099B on schedule D, the cost basis and the sales proceeds would be entered as the same figure.
 

efflandt

Senior Member
I didn't think about that (work for a private company), but if the employee stock option was exercised to sell immediately (instead of being held) and included in reported wages on W-2 box 1, the gain and withholding are already accounted for, and schedule D may not be needed.

The mention of a loss is probably only applies IF you have a loss. But it would seem silly to execise it at a time when stock price was less than the option price.

Have you asked your employer or fellow employees how ESPP is handled on taxes?
 

LdiJ

Senior Member
I didn't think about that (work for a private company), but if the employee stock option was exercised to sell immediately (instead of being held) and included in reported wages on W-2 box 1, the gain and withholding are already accounted for, and schedule D may not be needed.

The mention of a loss is probably only applies IF you have a loss. But it would seem silly to execise it at a time when stock price was less than the option price.

Have you asked your employer or fellow employees how ESPP is handled on taxes?
Actually, the schedule D may still be necessary, despite the W2.

What often happens is that the company reflects the exercise of the stock option on the
W2, but a 1099B still gets generated from the brokerage firm handling the transaction. Therefore if a Schedule D isn't generated, a CP2000 ends up being generated by the IRS.
 

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