"Code V—Income from the exercise of nonstatutory stock option(s). Show the spread (that is, the fair market value of stock over the exercise price of option(s) granted to your employee with respect to that stock) from your employee’s  exercise of nonstatutory stock option(s). and is included in box one. and taxed. That will be the employee's basis. You then adjust the brokers reported basis to reflect the true basis. All the ones I have done I have never seen a brockers statement with the correct basis. You do not change the basis on the brokers statement, you use the adjustment box on the 8949. no explanation necessary