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Jason M. Tyra, CPA
Jason M. Tyra, CPA, Certified Public Accountant (CPA)
Category: Capital Gains and Losses
Satisfied Customers: 178
Experience:  Principal at Jason M. Tyra, CPA, PLLC
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I received an option shares of nonqualified stock (NQ) when

Customer Question

I received an option for 500 shares of nonqualified stock (NQ) when hired, at $15 per share. Three years later I exercised the option on 300 shares now valued at $45 per share. Federal, state and fica taxes were taken out and the proceeds reported as income on my paystub and W-2. Do I need to use Schedule D and related forms since that would double tax this income? Should I amend a tax report from a prior year for this same scenario to remove schedule D?
Submitted: 1 year ago.
Category: Capital Gains and Losses
Expert:  Jason M. Tyra, CPA replied 1 year ago.

Hi Gary,

The answer is "maybe." You are right to be careful about double reporting income. Typically, if you exercise options by cashing out and not by actually owning the stock for a period of time, the income you receive is ordinary in character and shows up on your W2 from your employer. If that is what happened in your case, then you should be all set. You have nothing related to this transaction to report on schedule D.