On my W-2, in box 12, I have a certain amount with code V in it. Per my understanding, Code V is Income from exercise of nonstatutory stock options, which is already included in my W-2 as income.
I am confused on what I need to do about this, regarding tax reporting. Based on my research I got two conflicting answers:
1. Do nothing. This is the discount part of your employee stock purchase plan stocks and is thus taxed as regular income.
2. This amount needs to be added to the cost basis (to reduce the Gain) since this is already taxed.
Which is the correct answer? If it is 2, how do I proceed then? How do I identify the stocks to add to the cost basis etc?
Regards and many thanks for the help. Taxes are so fun !.
At that point you will enter the correct cost basis. In fact I assume under new broker reporting requirements the broker will report the correct cost basis as covered shares.
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