Yardley CPA Posted March 22, 2014 Report Share Posted March 22, 2014 Client received Form 3921 showing: - Date Option Granted 4/30/2008 - Date Option Exercised 4/25/2013 - Exercise Price Per Share $21.27 - FMV per share on Exercise Date $35.90 - No Of Shares Transferred 62 In addition, received letter from employer stating: I have exercised your 4/30/08 ABC Company Corporation Stock for 62 shares of Class B Common Stock and issued stock certificate # 6819 in return for your payment of $1,318.74. Per your request I have redeemed these shares and issued you a check for $2,225.80. The $907.06 difference between the FMV of ABC Company at the time you acquired it and its cost will be included as ordinary income on your 2013 Form W-2. Based on this information, I assume, since the $907 is included in the employee's W-2, that the exercise should be shown on Schedule D/8949 as Proceeds of $2,226 and Cost Basis of $2,226, showing no gain or loss? Is that correct? Thanks! Quote Link to comment Share on other sites More sharing options...
mcb39 Posted March 22, 2014 Report Share Posted March 22, 2014 If I remember correctly, these are reported on a separate W2 with accompanying explanation paperwork. I haven't done one of these for a while, but I don't believe you have to do anything with the Sch D because they are reported as ordinary income. (Something like that) Someone who has done one of these recently can jump in here. 1 Quote Link to comment Share on other sites More sharing options...
Yardley CPA Posted March 22, 2014 Author Report Share Posted March 22, 2014 MCB...thank you. I recall something similar since they are reported on the W2. With that said, a part of me thinks you need to show the exercise on Schedule D as no gain/loss. No 1099-B was received. Quote Link to comment Share on other sites More sharing options...
Lion EA Posted March 22, 2014 Report Share Posted March 22, 2014 Yes, Yardley. His W-2 ordinary income is part of his cost basis. A "same day" or close to it sale of his shares would result in zero gain/loss, or a very small loss due to broker or transfer fees, if charged. Do report on 8949/D even if your client didn't bring you a 1099-B (use "C" if no 1099). 2 Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted March 22, 2014 Report Share Posted March 22, 2014 I agree with Lion, I'd show it just to avoid a later CP2000. Sometimes IRS gets these right, sometimes they do not, and just react to the Form 3921. 1 Quote Link to comment Share on other sites More sharing options...
Yardley CPA Posted March 22, 2014 Author Report Share Posted March 22, 2014 Thank you, All for chiming in. Quote Link to comment Share on other sites More sharing options...
RichRhodesEA Posted March 22, 2014 Report Share Posted March 22, 2014 The exercised stock options should show up on the W- in box 12 coded V. Rich Quote Link to comment Share on other sites More sharing options...
Yardley CPA Posted March 22, 2014 Author Report Share Posted March 22, 2014 Rich...the W2 does not reflect any stock option code in box 12. Only thing in 12 is Life Insurance and Medical. Nothing else. But box 14 Other shows OCOMP of $907 Quote Link to comment Share on other sites More sharing options...
Lion EA Posted March 22, 2014 Report Share Posted March 22, 2014 Box 14. Code V may be nonqualified stock options. I think his OCOMP is probably Option Compensation or Other Compensation, and the $ amount is right for the scenario described. Does this transaction flow the way you expect it to, Yardley, in your software? Quote Link to comment Share on other sites More sharing options...
Yardley CPA Posted March 22, 2014 Author Report Share Posted March 22, 2014 I use ATX, Lion. I don't have any ability to enter Stock Incentive info in box 14 of ATX's W2 input form (unless I am missing something or just don't see the entry?) Based on the letter the client received, it seems like the $907 is included in his Federal and State wages on the W2 form. I planned on completing Schedule D/8949 to show: Date Acquired: 4/30/2008 (date option was granted) Date Sold: 4/25/2013 (date option was exercised) Proceeds: $2,226 Cost Basis: $2,226 Thoughts, Lion? Quote Link to comment Share on other sites More sharing options...
Lion EA Posted March 22, 2014 Report Share Posted March 22, 2014 Box 14 is information only. If his employer included info there, great. If not, you should not enter anything onto a W-2 that is not there. (Don't know why your software doesn't let you enter what's in Box 14, though. Suggest an enhancement to them for next year.) Didn't he acquire the stocks upon exercise? 04/25/2013 Date Sold is the date he redeemed them according to the letter you quoted, but you'll have to look to that or other information from your client for the date. It sounds very much like a same day sale, or a date close to 04/25/2013. His Cost Basis is $2,226 And, his Proceeds sound like $2,226 unless there were any commissions or fees taken out. 1 Quote Link to comment Share on other sites More sharing options...
mcb39 Posted March 23, 2014 Report Share Posted March 23, 2014 I use ATX, Lion. I don't have any ability to enter Stock Incentive info in box 14 of ATX's W2 input form (unless I am missing something or just don't see the entry?) Based on the letter the client received, it seems like the $907 is included in his Federal and State wages on the W2 form. I planned on completing Schedule D/8949 to show: Date Acquired: 4/30/2008 (date option was granted) Date Sold: 4/25/2013 (date option was exercised) Proceeds: $2,226 Cost Basis: $2,226 Thoughts, Lion? You can enter Box 14 info in ATX by choosing Not on list. I always enter everything that is on the W2. It doesn't flow anywhere, but the IRS is seeing the same W2 that you are seeing. As for the entries on D/8949, sounds fine to me. Quote Link to comment Share on other sites More sharing options...
joanmcq Posted March 23, 2014 Report Share Posted March 23, 2014 ISOs aren't reported I. Box 12, only NQSOs are. You do need to report the sale. If the client didn't bring a 1099-B (and I'm sure there is one if the stock is publicly traded), then same sale price as basis. Quote Link to comment Share on other sites More sharing options...
Yardley CPA Posted March 23, 2014 Author Report Share Posted March 23, 2014 Based on this information: Client received Form 3921 showing: - Date Option Granted 4/30/2008 - Date Option Exercised 4/25/2013 - Exercise Price Per Share $21.27 - FMV per share on Exercise Date $35.90 - No Of Shares Transferred 62 No 1099 B was received. Would the Purchase date be 4/30/2008? I know the Sale date is 4/25/2013. Quote Link to comment Share on other sites More sharing options...
jklcpa Posted March 23, 2014 Report Share Posted March 23, 2014 You would use the exercise date of 4/25/13 as the date of purchase. The grant date is the company giving the employee the chance to purchase the shares during a specified time and at a discounted price. The exercise date is the date that your client actually did make the purchase and acquired the shares. 1 Quote Link to comment Share on other sites More sharing options...
Yardley CPA Posted March 23, 2014 Author Report Share Posted March 23, 2014 Thank you, All! Quote Link to comment Share on other sites More sharing options...
Catherine Posted March 23, 2014 Report Share Posted March 23, 2014 Do check for transaction costs; I usually find these end up generating small ($10 - $30) capital losses due to broker fees. 1 Quote Link to comment Share on other sites More sharing options...
joanmcq Posted March 23, 2014 Report Share Posted March 23, 2014 If it wasn't through a broker, there's usually aren't transaction costs. I wouldn't sweat it I'd the client didn't deign to give you a 1099-B. 1 Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.