W-2 Code V

[MsTabbyKats]

I'm having a senor moment here 

 

W-2...code V....options included in Box 1

 

Should there be a corresponding 1099-B showing this amount? (So the Schedule D ends up a wash)

[joanmcq]

Yes. Unless they didn't sell the stock, but I've only seen one time where the client bought & held.

Edited February 24, 2015 by joanmcq

[GraceNY]

The person may have exercised their options and paid for them.  Therefore, if they didn't sell them there will be no 1099B.  This W-2 should be kept with their option and purchase paperwork.  It could be needed to establish basis if they sell them later.

 

On the other hand, if it was a "cashless" exercise, then some shares were sold to cover the Fed, SS, Med., and if applicable, state taxes.  It is likely they received a 1099B for this transaction.

 

I have client give me "everything" they have with respect to the options in order to see what actually took place.

 

Hope this helps.

 

Grace

[TAXMAN]

Sometimes this animal will get to the 6251. Otherwise what Grace said is mostly what I see. One or the other. See if you have all the paperwork. I have sometimes found the info on a pay stub occurring about the same time the exercise took place.

[Catherine]

Yes, there can be timing issues with some types of options that lead to "phantom income" on the 6251 with a corresponding offset another year.  

[Richcpaman]

Also, with the 1099-B not having to be sent out to taxpayers until Feb 15th, 28th or even March 15th, you may have many times that the W-2 is in hand for A LONG time before we get the 1099-B with the stock sale.

 

Do not let the taxpayers desire to FILE NOW force your own hand.  Wait for the documents.

 

And I have seen W-2's with known options sales, and no code V...   So that 1099-B is coming, and its a time bomb.  (Here is looking at you Google...)

 

Rich

[MsTabbyKats]

Also, with the 1099-B not having to be sent out to taxpayers until Feb 15th, 28th or even March 15th, you may have many times that the W-2 is in hand for A LONG time before we get the 1099-B with the stock sale.

 

Do not let the taxpayers desire to FILE NOW force your own hand.  Wait for the documents.

 

And I have seen W-2's with known options sales, and no code V...   So that 1099-B is coming, and its a time bomb.  (Here is looking at you Google...)

 

Rich

And this is exactly why I have a large pile "on hold"....(have 2 Google people on that pile)

 

I was thinking of just "plugging" a 1099-B with the V amount....to cover all bases.

[Jack from Ohio]

And this is exactly why I have a large pile "on hold"....(have 2 Google people on that pile)

 

I was thinking of just "plugging" a 1099-B with the V amount....to cover all bases.

Include the redemption fees by the broker to show a small loss.  This is legitimate.

[Lion EA]

Oh, gosh, I let one slip past me.  RSUs she exercised and held.  Now that you post about it, I realize she had no 1099-B but sure enough, enough shares were sold to cover her w/h taxes.  Well, I'll tell her to contact me as soon as she gets her refund AND her 1099-B (I think it might be Merrill Lynch) and I'll amend for free.  How did I let that slip past?  I know the 1099-Bs straggle in later and later each year.  She filed later last year.  And, she had a lot of paper re all the dividends she received.  I was rushing, or tired, or both, and thought I had paper on everything, investments, HSA, highly compensated changes in her 401(k) limits, etc..  I goofed on her return once years ago, different issue, so hope she's forgotten that.  She brought me lunch the last couple of years, so I want to take good care of her!

[MsTabbyKats]

Good thing I posted about my memory loss 

[Lion EA]

Yes, thank you, Tabby.  At least I can tell her now before she gets an IRS letter.

[Catherine]

Lion, we all do the same thing.  Hopefully with clients in rotation, rather than the same one year after year!