1099-B and Options

[MsTabbyKats]

Client works for Microsoft and exercised some options.

This is on his 1099-B

 

The rep at Fidelity told him NOT to use the figures on the 1099-B...but to use the supplemental information...or it would be duplicating income.

 

Logically....it makes sense.

 

However....I thought the 1099-B was supposed to reflect everything and not be tampered with.

 

I don't want the client to get "a letter"....yet I don't want him to overpay.

 

Anyone else ever "not use the 1099-B"?

[Lynn EA USTCP in Louisiana]

Change for this year is that the 1099-B basis will not reflect the income allocated to the taxpayer and shown on their W2 via code V.  I have one (Whole Foods stock) wherein the supplemental form does include the code V basis and closely approximates what the 'real' basis should be. 

[Richcpaman]

Have one on my desk right now.

 

Exercise price was $28.32.  No basis amounts reported on the 1099-B. 

 

Well...  The IRS likes it, because now they can send you a letter for income that is already in the W-2, for the stock sales with NO basis.

 

Idiots.

[Lion EA]

I start with the 1099-B and make sure the proceeds match.  Then, I turn to the supplemental information for basis information and other details.  If covered, and SI doesn't match 1099-B, then I have to report adjustments.  If uncovered, I stick with SI info.  And, then I have to make sure I agree with stock option basis, that the SI really included the W-2 code V.  If not, more adjustments.  I think it got more complicated this year for preparers.

[joanmcq]

You have to include the code for 'reported basis is wrong' and put in the wage basis as an adjustment. Don't just change the basis or you are looking at a cp2000.

[Lion EA]

Right, adjustments have two parts.  In my software, I pick a code from drop-down menu for one box and then put the amount of the adjustment in the next box.  Watch your input/read the input screens, look at how it appears on 8949 (is it what you expect?), and read the diagnostics.  I sometimes have to change a number to a negative number in an adjustment.

[Kea]

Also, it depends on whether the 1099 B uses Codes A or D  for "covered" transactions.  If they used B or E for non-covered, then they didn't send the basis to IRS.  You don't have to use an adjustment code.  Just report the correct basis regardless of what's on the 1099B.

[Lion EA]

Yep, adjustments if Covered.  Just use the actual basis if uncovered.