TAXMAN Posted January 21, 2011 Report Share Posted January 21, 2011 Here are the facts: 2003 stock option-Exchange Existing Shares for Options 2003 option available- [email protected] FMV per share@7/29/05=51.78 Surrendered Cert No.11147 (77 shares (cost 1585.00)) 77 shares x 51.78=$3987.06 3987.06/17.975=221.81(rounded to 222 shares to be issued 222 option shares x 17.975=3990.45 77 cancel shares x 51.78 =3987.06 =Cash due 3.39 In looking at TP 05 return no ISO or Schedule d showing any of this. TP now wants to sell these 222 shares. I think basis is $1585.00 + 3.39 =1588.39. I even checked his W-2 for that year(05)and Wages were not grossed up for the difference. Would you agree with me? Thanks Quote Link to comment Share on other sites More sharing options...
joanmcq Posted January 21, 2011 Report Share Posted January 21, 2011 ISOs shouldn't be reported on the W-2 in the year issued; they create AMT, but not regular income tax. They are likely qualified sales by now (I'm a bit rusty on options at this point), and would only generate capital gain. Both the Quickfinders and Tax Book have good sections on the treatment of options. Quote Link to comment Share on other sites More sharing options...
mcb39 Posted January 22, 2011 Report Share Posted January 22, 2011 I don't understand the reference to the year 05. Stock options are reported and taxed in the year they are exercised. Proper reporting should be done by employer. I am rusty on this too as I haven't done one for a while, but you never know when one will pop up. Quote Link to comment Share on other sites More sharing options...
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