Non-qualified stock option cashless sell reported on W2 and 1099-B

Forum|Forum|4 years ago
February 13, 2022
1 reply
0 views

I am retired, but had stock options from my company I had not exercised. I sold them via cashless sell. I received a W2 from my prior employer showing the gain and taxes that were withheld. It also shows up on my Fidelity 1099-B as a sale of stock. Both are reported to the IRS. How do I handle this in Turbo Tax? If I just enter the information I will have the income reported twice and pay taxes on each one.

Best answer by FangxiaL

The cost basis of an NQSO sale reported on the 1099-B doesn't include the stock's discount. Since you have paid taxes on the discount (also called the compensation, taxed as ordinary income), you need to make an adjustment in the cost basis when entering the 1099-B transactions.

Follow these steps to adjust the cost basis:

On the Let's get the details about this sale from your 1099-B screen, select Nonqualified Stock Options (NQSO) from the first dropdown at the top.
Fill out the other fields on that screen, and when you get to the last field for box 1e, enter the cost basis from your 1099-B and be sure to put a checkmark in the cost basis is incorrect right below it. Then continue.
On the following screen, select the middle option, I know my cost basis. Then enter the correct cost basis from your W-2 (the box 12, code V amount).
Select Continue and the transaction will now reflect the corrected cost basis.

For more details, please see this help article.

FangxiaLAnswer

Follow these steps to adjust the cost basis:

On the Let's get the details about this sale from your 1099-B screen, select Nonqualified Stock Options (NQSO) from the first dropdown at the top.
Fill out the other fields on that screen, and when you get to the last field for box 1e, enter the cost basis from your 1099-B and be sure to put a checkmark in the cost basis is incorrect right below it. Then continue.
On the following screen, select the middle option, I know my cost basis. Then enter the correct cost basis from your W-2 (the box 12, code V amount).
Select Continue and the transaction will now reflect the corrected cost basis.

For more details, please see this help article.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

amac121316

hi there, I have re-read and googled around trying to understand the question as well. Your answer sounds promising however I am unable to find this specific user-flow in Turbotax - I'm using Premier (went with the prompted upsell from the Deluxe package I usually get)

I've tried to both automatically import my 1099B from the brokerage as well as manually enter in a sales summary, and neither has induced the flow with the NSQO dropdown option you're describing.

Would you please clarify or post a screenshot on how to make this input available?

EDIT: to be clear, I do not see an option for this button: Let's get the details about this sale from your 1099-B

GeorgeM777

To enter your NQSO in TurboTax online, follow these steps:

Select Income & Expenses
scroll down the page to Investment Income,
select Stocks, Cryptocurrency, Mutual Funds, etc...
if you are entering just a few transactions, select I'll type it myself when you see that screen,
the next screen Now, enter one sale on your 1099-B,
in the box for Sales info, one of the selections will be for NQSO,
enter the remaining information.