Question

Long-Term Capital Gains on stock sale reported on both 1099-B and W-2

Forum|Forum|6 years ago
February 27, 2020
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My company bought back employee stock in late 2019 at a market value higher than my original strike price. I purchased this stock in 2016, so it qualifies for long-term capital gains. The earnings I received from this sale were reported on both the 1099-B from our broker and my W-2 from my employer.

ex. Number of Shares: 5,000

Strike Price: $0.10/share

Purchase Date: 5/16/2016

Purchase Price: $500

Sale Date: 12/9/2019

FMV on Sale Date: $7/share

Sales Price: $15/share

1099-B reported earnings up to FMV: 5,000 * $7 = $35,000

W-2 also reported earnings from strike price up to sales price: 5,000 * ($15 - $0.10) = $74,500

In order to get the proper long-term capital gains tax rate, I just want to report the 1099-B portion on form 8949, correct?

1. How do I properly file to reverse out the amount reported on my W-2 that's being taxed at my normal (higher) tax rate?

2. Do I then need to make an adjustment to this to bring the earnings value up to the total sales price on form 8949?

TurboTax Premier Online

D

DianeC958

The amount being reported on your W-2 is considered additional income that is not considered capital gain income.

When you sell the stock, the discount that you received when you bought the stock is generally considered additional compensation to you, so you have to pay taxes on it as regular income.

You need to report the amount that shows on your 1099-B as the proceeds from this sale. If the amount includes the amount reported on your W-2 you add this amount to your basis in the stock sold.

Link to Employee Stock Purchase Plan

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