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Questions regarding Box 12b and company stock transaction.

My W2, Box 12b shows...

My W2, Box 12b shows V $3,887.28. This is my NET proceeds from a company stock transaction and income and taxes were included in the other W2 boxes. I also received a 1099-B from the Broker showing Gross Proceeds of $14,512 - but no cost basis, fed taxes withheld, etc. questions - 1) Isn't the 1099-B wrong? 2) Do I need to fill out a schedule D for this?

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Answered in 9 minutes by:
2/1/2008
Bill
Bill, Enrolled Agent
Category: Tax
Satisfied Customers: 3,153
Experience: EA, CEBS - 35 years experience providing financial advice
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The 1099-B will not include your cost basis. Yes, you will have to report this as a gain on a Schedule D. Your gain will be the difference between the sales proceeds you received and your cost basis for the stock which will be the amount (exercise price) you paid for the stock plus the $3,887.28.

Bill
Bill, Enrolled Agent
Category: Tax
Satisfied Customers: 3,153
Experience: EA, CEBS - 35 years experience providing financial advice
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Customer reply replied 9 years ago
Reply to Bill's Post: On the schedule D, how will I not duplicate the $3887.28 that is already reported in my income?

The $3,887.28 is included in your cost basis so there will be less gain reported on the Schedule D.

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Customer reply replied 9 years ago

I filled out Schedule D - shows a net capital gain of $3,887. That moves over to form 1040, line 13 capital gain. However, my $3887 has already been included on 1040 line 7 in my wages, so in essence, why am I being double-taxed on this gain?

Can you give me some specific figures, such as the total amount you paid for the stock, the number of shares, the exercise price), the value of the stock on the date you purchased it, and how many shares were involved?
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Customer reply replied 9 years ago
Sure - two transactions. Both options held over 1 year.

1) Sales Price: $12,990, cost $9840, gain $3150.
2) 1,662, 925, gain 737.

Why do you need # ***** shares, exercise price, etc..?

Your total cost basis is $14,652 ($9,840 + 3,150 + 925 + 737). So you have a loss. The amounts you paid for the stock (9,840 + 925) are added to the appreciation (3,150 + 737) because the appreciation was already included in your taxable income on the W-2.

See page 13 for description of item V on W-2.

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See page 11 of Publication 525 regarding basis on sale of stock -

http://www.irs.gov/pub/irs-pdf/p525.pdf

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Customer reply replied 9 years ago
Reply to Bill's Post: I must be missing something.

So if you look at Sched D, Part II long term capital gains - I have column d (sales price) = 14,652. column e (cost or other basis) = 10,765 and column f (gain or loss) = 3887.

You are saying my cost or other basis should be equal to 14,652? I do not get this logic.
Your cost basis is $14,652 not $3,887. Your basis is the amount you invested plus any amount that was included in your income upon exercise. The $3,887 was included in your income on the W-2 as a result of your exercising your option. The second paragraph under Sale of Stock in Pub. 525 discusses the basis.
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Customer reply replied 9 years ago

Thank you, ***** ***** answers my question.

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