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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13344
Experience:  15years with H & R Block. Divisional leader, Instructor
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I am trying to figure out what I should use as the cost

Customer Question

I am trying to figure out what I should use as the cost basis for options I got in a grant. Seems that I will be taxed twice if I use the cost basis on the 1099B as it is already on my w-2
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Submitted: 9 months ago.
Category: Tax
Expert:  Robin D. replied 9 months ago.

Hello

The amount you declare as cost and sale price is the same. This will basically zero out the sale. You will not be taxed twice.

The company imputes income to you of the difference between fair market value and exercise price, FMV-E. That amount is added to your W-2 form, and hopefully shows up in Box 12 indicated by a V.

The amount FMV-E is the imputed income. Again, you will notice FMV-E is not only what the broker paid out, it is also the imputed income amount that shows up in the W-2 form.

The Schedule D sales amount reported by the broker is FMV minus any commission. Your cost basis is the FMV. So the FMV is the sales price, and the Schedule D for this transaction will show zero (if no commission was charged) or a small loss (due to the commission).

Expert:  Robin D. replied 9 months ago.

Checking to see if you responded

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