Which means you'll have an adjustment to the 1099-B basis to include the W-2 inclusion amount. Your client has another piece of paper, received at the time of exercise and sale, that shows the inclusion calculation.

I'd like to beat with a stick the person who decided what the 1099-B should look like for these situations.

@sjrcpa and @PhoebeRoberts Just want to make sure on this.  I have to report both W-2 and Form 1099-B as is.  No double counting and therefore there is no adjustment necessary..  Thanks.

Not sure how you got "no adjustment necessary" from "you'll have an adjustment."

If your client had selling expenses, you should expect a small capital loss in the amount of selling expenses once you've made any appropriate adjustments to the 1099-B. Your client has another piece of paper that they haven't given you yet.

Is this adjustment to be on Part 1 Form 8949 Column F: code E and Column G: a negative adjustment number?  Part 1 because Form 1099-B indicated Box A. Thanks.

I've always used Code B, and I don't think that your fact pattern necessarily constitutes an option premium (usually that arises when your taxpayer sells an option that someone else might exercise), but I wouldn't roll my eyes if I saw it on a tax return.

Thanks alot to all of you for your time.

In ProConnect, how do you choose Code B, I am only getting the option of using Code E and found this question in looking for a solution.  Thank you.