Taxes on payouts for stock after company acquisition (merger)

Forum|Forum|1 year ago
March 28, 2025
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I exercised stock options in November 2022 just prior to my company's merger. I was paid for the stock in November 2022 and taxes were paid with the basis factored in. There were two additional payouts made in April 2023 and July 2024 that were made as part of the merger deal because milestones were satisfied. I received a 1099-B for the 2023 and 2024 tax years, but the date of purchase and the basis were missing. I need help figuring out how to report these additional payouts.

How would those payouts be classified on my taxes?
Are the payouts non-qualified stock options (NQSO)?
Are the payouts considered short or long term?
Are the payouts considered a same-day sale?
Do the payouts have a basis greater than $0?
Is the full amount of the payout taxable?

I want to make sure I correctly report this year's payout on my taxes!

mglauner

If you exercised stock options, your Cost Basis would be the Exercise Price, plus any amount of discount you were taxed on your W-2. Since brokers don't have this info, they often report a cost basis of $0 on the 1099-B. You may have received Form 3922 reporting the exercise price.

If you can calculate your correct Cost Basis, you can enter your 1099-B as a regular stock sale (not employee stock) and check the box 'cost basis is missing or incorrect' and enter the correct basis. Since you exercised the options the options in 2022, you can indicate long-term and 'various' as the dates.

Here's more info on Employee Stock Purchase Plans.

@OptimusBob