Code V on W2

Forum|Forum|6 years ago
April 20, 2020
1 reply
14 views

Good morning:

I am having a brain freeze here. My client has Code V on his W2 (income from exercise of nonstatutory stock options for $30,265. His 1099B has proceeds of $9,186 and basis of $9,253 ($67).

How do I report on Form 8949?

ProSeries Basic

This topic has been closed for replies.

itonewbie

Level 15

NQSOs are not accorded any tax preferential treatments. The bargain element will have already been subject to tax in Box 1 of the W-2, which forms the basis. The custodian broker would have good records of these transaction and could generally be relied upon for the information they provide.

Unless your client feels that the amounts reported on the 1099-B is not correct, you should go with what's reported on the form. Given the small amount of loss, it's probably a same-day exersale, which was used, at least in part, to fund the exercise. The difference is probably a combination of transaction costs and small fluctuation in the share price.

Since this is a covered security and the basis is reported to the IRS, it does not need to be reported on F.8949 and can go directly to Sch D (unless there are other adjustments that need to be made for some reason).

---------------------------------------------------------------------------------Still an AllStar

M

mcd1231Author

Level 4

I didn't mention the Code V was in Box 12 of his W2. Shouldn't I ask him if he exercised these options?

itonewbie

Level 15

We always ask for compensation breakdown and details of all options granted and exercised (but that's also because we need details like these for expat tax). Personally, I find having these details useful - even if it's not needed in the current year, we'll have them for future years.

You should also request detailed statement(s) that support the 1099, if you don't already have that on file.

---------------------------------------------------------------------------------Still an AllStar

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