Question

Double Taxing Exercised shares

Forum|Forum|3 years ago
April 12, 2023
1 reply
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I bought/sold ISO shares on same day. My Morgan Stanley exercises confirmation shows the total purchase, the cost of those shares and my exercise gain. The total gain is in my W2. And they removed 34% tax that was withheld. With my 1099, my income has been increased an additional amount equal to my exercise gain. So my exercise gain is showing up in my total income twice. I was already taxed on that gain. Do I have to include the 1099 as it is a duplicate of what is in my W2?

T

ThomasM125

You do have to report the Form 1099-B, but you need to adjust the cost basis to reflect the income reported on your W-2, typically by adding that income to the cost basis reported on the Form 1099-B. You will see an option to do this in TurboTax after your enter your 1099-B form as follows:

Choose the Federal option on your left menu bar
Choose Wages & Income
Choose the Investments and Savings (1099-B, 1099-INT, 1099-DIV, 1099-K, Crypto) option
Choose the Stocks, Bonds, Mutual Funds option
Enter your Form 1099-B information and check the box that says "The cost basis is incorrect or missing on my 1099-B" and you will see an option later to enter the correct cost basis