Non-Qualified Stock Options and Schedule D?

Yes you do, and no, it won't. The amount deemed to be wages (the box 12 "V" amount) adds to your basis. On Schedule D you'll wind up with a short-term loss equal to the fees.

Don't try to do this through the interview. Use Forms mode to directly enter the stock sale to a 1099-B input screen.

No, it won't be counted twice.

You will also receive a 1099. (They are not due until Feb 15 of this year so you may not have seen it yet.)

On Schedule D, you need to enter the "cost or other basis" and the "sales price". The "cost or other basis" will be the sum of the the option price that you paid when you exercised and the income reported on the W2. The "sales price" will be the amount you received from the sale, reported on the 1099, and this amount should be net of Merrill's commissions and fees. The resulting gain will be close to, but not exactly zero.

The W2 income is also reported on 1040 in the usual way for wage income.

Steve

Actually it will be a different, small amount. This is because the W2 figure is based on the closing stock price on the day of the transaction, whereas the sales price on the 1099 is based on whatever price the trade was actually made at, intraday.

Steve

For exercise-and-sell transactions that occur on the same day, companies are permitted to use the sales price as the FMV (basis). That might be a "recent" change (i.e., some time in the last decade!). I remember that it used to be as you describe.

(But in the past, the W2 figure was the FMV as determined by the company. That is not always the closing price. Some companies use the daily average. There might be other accepted practices.)

Thanks. It could easily have changed in the last few years, without me noticing.

Steve

If you have bought the premium version or higher of this software, I believe the interview will handle it just fine. Probably true of other DIY software as well -- to some extent, you get what you pay for.

-Mark Bole

If I had more investments or stock transactions than this one, I might have. Having just this one, the Deluxe version of Turbotax is just fine for my needs, thanks to the help from the kind folks here.

With their helpful information, I was able to use the Schedule D form directly to enter the information. Turbo tax actually did make it easy to the use form, because once you enter the type of Stock transaction, it highlights the fields in which you need to enter information.

Bonnie