1099b vs. line v on w2

Forum|Forum|3 years ago
May 22, 2022
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when i enter the 1099b data for stock sales it adds the gain to my total income AGI. The gain is already noted on the employer w2 on line 12c code v? How do i avoid double counting this number?

Mike9241

what was entered as the cost basis of the stock?

example $x was added to your w-2 box 1 for the exercise and you received y shares of stock.

$x/y is the cost basis for each share sold

$x/y times the number of shares sold would be your total cost basis.

any gain in excess of the cost is additional taxable income - capital gain

any loss is deductible as a capital loss to the extent allowed by law.

taxnovice14Author

Thanks for the quick reply.

The gain on the 1099b, is already factored into my line 1 on my W2, (the same gain is also noted on the w2 line 12 code D. By entering the 1099B the gain is being counted 2x. Do I need to upgrade to Turbo Tax Premier?

pk12_2

Employee

@taxnovice14 agreeing with @Mike9241 and adding my understanding of the situation ----

1. You exercised "statutory stock option", the employer therefore reports this a gain of $X based on the diff. of option price and the FMV. This is reflected on Box 12 with code V.

2. If you actually sold this back to the company at the FMV -- thus generating a 1099-B. When you report this transaction ( 1099-B ), your selling price is FMV and the basis is also FMV.

3. Therefore through a lot of paperwork you are actually taxed only on the first transaction ( exercising of the option ) and the second transaction is a wash ( no gain and no loss).

My reference on this is page 20, middle of the page covering code V -- https://www.irs.gov/pub/irs-pdf/iw2w3.pdf

Does this make sense ?

NCPERSON1

@taxnovice14 - maybe using some numbers would help

Let's say you had 1000 stock options issued that vested when the market value was @$20 per share.

and a few days after the shares vested you sold those 1000 shares at $21 per share.

Your W-2 would show $20,000 of taxable income (1000 times the market value $20 per share)

your 1099-b would show $21,000 from the sale of 1000 shares. But the cost basis of these shares is $20,000 (since you already paid regular income tax on your W-2 for this $20,000).

So on the 1099-B, you would want to make sure that the $21,000 sales proceeds is reduced by $20,000 of cost basis. That would leave you with a taxable gain of just $1,000 to pay capital gains tax on. and that $1,000 is the increase in the stock price from $20 to $21 times the 1,000 shares sold

does that help?