What do I report on schedule D when exercising options?
March 22, 2006
Date: Fri, 03 Mar 2006
One of your readers previously wrote about making a same day sale when exercising an employee stock option. $18,000 of income was reported on his W-2 form.
You told him, “in most cases, people report a LOSS of a few dollars for the sale on Schedule D.”
Shouldn’t he have an $18,000 GAIN on Schedule D.
Thanks for your response.
Date: Sat, 18 Mar 2006
No. If he did, he would be reporting income for the same transaction twice.
The income reported on Form W-2 is added to the tax basis (cost to determine tax gain or loss) of the stock when reporting the transaction on Schedule D.