Do I need to report option sales on Schedule D?

October 14, 2011

Date:   27 Mar 2008
From:   Diane

I exercised non-qualified stock options for 40 shares of stock. The ordinary income was included in wages on my W-2 form. Do I still need to report the sale on Schedule D?


Date:   10 Apr 2008

Hello Diane,

If you received a Form 1099-B for the sale, you still need to report the sale on Schedule D. Add the ordinary income included on your W-2 to the option price to compute to tax basis or “cost” for Schedule D, which should eliminate the gain on that form. If you don’t report the sale, the IRS will probably send you a letter saying you underreported your income.

Good luck!

Mike Gray

For more information about non-qualified stock options, request our free report, “Executive Tax and Financial Planning For Non-Qualified Stock Options”.

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