My ISO income is on my W-2. Do I still need Schedule D?

September 19, 2011

Date:   Tue, 8 Feb 2011
From:   Danilo

Hello,

I exercised my ISO last year. The amount was included in my W-2. Do I still have to report the stock sale on Schedule D?

Thank you very much.

Best regards,
Danilo

Answer

Date:   Feb 11, 2011

Hello Danilo,

Assuming you received Form 1099-B for the stock sale, yes. If you don’t, the IRS will probably issue a notice suggesting you have underreported your income.

Your tax basis for the stock will be the option price paid plus the income reported on Form W-2. (I’m assuming there was no stock swap.) Employers usually give a Statement of Taxable Income for exercised ISOs that details this information.

If you made a same-day exercise and sale, you should have zero income or a small loss.

Good luck!

Mike Gray

For more information about incentive stock options, request our free report, Incentive Stock Options – Executive Tax and Financial Planning Strategies.

Comments are closed.