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Financial Planning / Tax Strategies


Subject:  Re: Incentive Stock Options, W2 and 1099-B issue Date:  2/20/2014  8:59 PM
Author:  FlyingDiver Number:  120125 of 129521

Do you have access to the actual numbers to confirm the double reporting? There's two parts to a same-day-sale ISO exercise:

1. The ISO is exercised - this generates ordinary income in the amount of shares x (market price - strike price). This goes on the W2

2. The shares are sold, which generates short term gain (or loss) in the amount of shares x (market price - acquisition price). Acquisition price is the market price from step 1. This generates a 1099-B.

The market price in steps 1 and 2 is almost never the same. The steps don't happen simultaneously, in my experience, so the prices change. It might also be an issue of market spread.

The summary you get from the brokerage handling the options should show the various numbers.