SARs: Taxes

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How To Report Sales Of Company Stock On Your Tax Return

The myStockOptions.com Tax Team
UPDATED FOR 2012! Learn how to report your sales of stock on the new Form 8949 and revised Schedule D of IRS Form 1040.

VIDEO! New Tax Return Forms & Reporting Rules For Stock Sales

Bruce Brumberg
If there's a way to make learning about tax forms fun, we'll try it. Watch and hear this animated presentation on the expanded IRS Form 1099-B, the new IRS Form 8949, and the revised Schedule D. Learn now to prevent costly tax return mistakes later!

What You Need To Know About Stock Appreciation Rights (SARs): Part 2

Bruce Brumberg
Stock appreciation rights (SARs) are garnering interest among companies. Part 2 discusses taxes, IRS concerns, and why companies like SARs.

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FAQs (Jump to articles)

How are stock appreciation rights taxed?

When you you exercise stock appreciation rights, depending on the plan's design and practices, you receive...

NEW! What are the big changes with reporting stock sales this year on my tax return? Why have these changes occurred?

For people who sold shares in 2011, major changes in tax reporting and filing are taking effect this tax season...

What tax statement will I receive from my broker after a sale of company stock I acquired by stock option exercise, restricted stock vesting, or ESPP purchase?

You will need to gather certain information to complete your tax return. The broker will send you IRS Form 1099-B for the proceeds...

NEW! How is IRS Form 1099-B changing for sales of stock acquired from my stock options, restricted stock, or ESPP?

More information is now reported on this form than in past years. This may prove to be more helpful, but it also may be more confusing. Issued to you by your brokerage firm, IRS Form 1099-B is an important document that you must have to complete your tax return. Recent legislation has changed the form in significant ways that you must understand...

W-2 diagram! What will my W-2 show after I exercise stock appreciation rights?

The gain from your SARs exercise(s) is totaled on the W-2 with other income in the following boxes...

UPDATED! What are the biggest mistakes related to stock appreciation rights (SARs) that I can make on my tax return, and how can I avoid them?

It is easy to make tax return mistakes that lead to paying more than necessary or (perhaps worse) an IRS review. This tax season in particular will be more confusing than most because of the new Form 1099-B, the new Form 8949, and the significantly revised Schedule D...

Form 8949 and Sch. D diagrams! How do I report sales of shares from stock appreciation rights on my federal income-tax return?

Whether you sell all the stock at exercise or hold the stock and later sell it, you need to complete Form 8949 and Schedule D for the year of...

I acquired stock from exercises and restricted stock vesting a few years ago. When I sell the stock, how do I rediscover the cost basis for my tax return?

Let's first review the tax rules and the W-2 reporting. The tax basis for...

Are my stock grants affected by the rules of deferred compensation under IRC Section 409A and other parts of the American Jobs Creation Act?

A number of tax law provisions that may affect your stock grants were introduced in the American Jobs Creation Act (AJCA); the final regulations on deferred compensation under IRC Section 409A, which adopt the...

What is the tax impact on me if my company modifies outstanding stock options or SARs, such as by extending the option term?

With approval from the board, and perhaps also shareholders, your company can modify outstanding grants in a way that is consistent with its stock plan. However, it should avoid tax pitfalls for you and the company, such as...

For NQSOs or SARs exercised on the last business day of 2011, or for restricted stock that vests on that day, is the income taxable in 2011 or 2012?

All exercises with an exercise date in 2011, and all restricted stock with a vesting date in 2011, will be included in 2011 taxes and on your W-2 for 2011, and will count...

When I exercise my stock appreciation rights (SARs), will the amount of tax withheld cover the amount of tax that I must pay when I file my return?

Employers usually withhold federal income taxes at the flat rate required for supplemental wages, which is...

I'm no longer an employee, so why is there withholding on my NQSO or SARs exercise?

Former employees' transactions, regardless of the reason for termination, follow the same withholding and reporting requirements that apply to...

If I exercise stock appreciation rights (SARs), will I need to make estimated tax payments?

At a minimum, at the time of your SARs exercise your company will withhold taxes from the proceeds at the required federal withholding rate for supplemental income. However, depending on your income, this minimum withholding may not be enough. If so, you will need to...

Does the tax-withholding rate for supplemental income differ for amounts less than $1 million and for amounts over $1 million?

Depending on the aggregate amount of supplemental income for the year, a two-tier rate applies. The withholding rate for supplemental wages that exceed $1 million in a calendar year is...

NEW! In the cost basis I use to report sales of company stock on my tax return, what part comprises the W-2 income from stock compensation or an ESPP?

When your W-2 income is added to the price you paid for the stock, this is your cost basis on your tax return. The table below presents the compensation portion of your tax basis for all types of stock grants and ESPPs...

I may leave my company to become a consultant, retire, or take another job. Will taxes still be withheld on my NQSOs, SARs, and/or restricted stock as they were when I was an employee? What if I live in another state when I exercise them?

Most companies base withholding on your employment status at the time of grant. If you work elsewhere or are retired at exercise or vesting, then...

My company's stock is now essentially worthless because of securities fraud by senior executives. Can I claim a casualty or theft loss on my tax return?

A casualty or theft loss would allow you to deduct the lost amount against your ordinary income, subject to some limits. However, Treasury regulations and court rulings would probably stand in your way. Nevertheless, what you can do is...

UPDATED FOR 2011 What are some year-end strategies for restricted stock and stock options?

This depends on several factors. Below we present 10 ideas...

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