Tax Center: Reporting Company Stock Sales

FAQ Table of Contents:

NQSO Stock

ISO Stock

Restricted Stock and RSUs

SARs Stock

ESPP Stock

NQSO Stock

Schedule D diagram! How are capital gains taxed when I sell my NQSO stock?

If you hold stock acquired from the exercise of an NQSO for more than one year, the appreciation is...

Schedule D diagram! How do I report any gain that results from the sale of my NQSO shares on my federal income-tax return?

You need to complete a Schedule D, Capital Gains and Losses, for the year of the sale of your stock and...

Schedule D diagram! I did a cashless exercise with my nonqualified stock options last year. Do I need to show the transaction on Schedule D of my Form 1040 tax return, or can I ignore the broker's statement (1099-B) since there are no gains or losses to report?

You should still file Schedule D, which is used to report capital gains and losses...

If I did simultaneous cashless exercises of stock options from several grants during the tax year, do I need to report each sale separately on Schedule D? Can I aggregate them in one line because I exercised and sold the stock on the same day?

Though each grant adds a different amount of money to your taxable ordinary income, the tax basis of all the shares is...

Schedule D diagram! I exercised NQSOs, held the stock, and now have long-term capital gains on the sale. Do I get any "credit" on my tax return for the income tax I paid for the spread at exercise?

This differs from the situation with ISOs in which your exercise-and-hold triggers AMT and you then have a tax credit...

Schedule D diagram! Is the brokerage commission taxed?

No. It reduces the sale proceeds you report on...

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ISO Stock

Schedule D diagram! I did a cashless exercise with my incentive stock options (ISOs). Should I report the transaction for capital gains purposes on Schedule D even though the gain is zero, and should I worry about the alternative minimum tax (AMT)?

By selling the ISO stock at the same time you exercised it, you eliminated the AMT. The same would be true if you had sold the stock at...

Schedule D diagram! I exercised my ISOs and sold the ISO stock later in the same year. How is this reported on my tax return when the stock price at sale is higher or lower than at exercise?

If you sold the stock at a price higher than it was on the day of your exercise, the spread at exercise is still...

Schedule D diagram! After I satisfy the ISO holding periods, how do I report a sale on my tax return?

After you have held the stock more than two years from grant and one year from exercise, the spread between the sales and exercise prices is...

Schedule D diagram! How am I taxed if I have made a disqualifying disposition (e.g., sale) of ISO shares in a different year than the year I exercised the option? How do I report this?

The rules are similar to those that apply to sales of ISO shares made in the same year as exercise; the difference is that you are taxed in the year of the sale of the stock...

Schedule D diagram! When I sell my ISO stock in a disqualifying disposition, will the broker's commission reduce the amount of ordinary income on my W-2 or the amount of gross sales proceeds on my Schedule D?

The final IRS regulations on ISOs (August 2, 2004) make clear that the amount of ordinary income in a disqualifying disposition is...

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Restricted Stock and RSUs

Schedule D diagram! How do I report the sale of my restricted stock on my federal income-tax return?

You need to complete a Schedule D, Capital Gains and Losses, for the year of the sale of your...

Schedule D diagram! Do I need to report on my Schedule D the restricted stock I sold or surrendered to my company for the tax withholding?

The reporting for the income at vesting and at the later sale of the remaining shares can cause confusion. You should definitely report a sale for taxes if you received a...

Schedule D diagram! When I hold restricted stock after it vests and later have capital gains on the sale, will I get any "credit" for the income tax I paid at vesting?

The vesting and the sale are separate transactions. You will first be taxed on the stock value at vesting...

Schedule D diagram! When my restricted stock units vested, my company automatically withheld shares to cover the tax. Do I need to report these shares on my Schedule D?

The tax reporting for the withholding and the later sale of the remainder can cause confusion. You should definitely report a sale for taxes at vesting if you...

Schedule D diagram! How do I report the sale of my restricted stock units (RSUs) on my federal income-tax return?

You need to complete a Schedule D, Capital Gains and Losses, for the year of the sale of your stock and file it with your Form 1040 federal income-tax return. You do this even if you are only...

Schedule D diagram! How do I report the sale of my performance shares on my federal income-tax return?

You need to complete a Schedule D, Capital Gains and Losses, for the year of the sale of your stock and file it with your Form 1040 federal income-tax return. You do this even if you are only...

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SARs Stock

Schedule D diagram! How do I report any gain that results from the sale of my stock appreciation rights (SARs) shares 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 a Schedule D ("Capital Gains and Losses") for the year of the sale and file it with your Form 1040 federal income-tax return. You will need to know...

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ESPP Stock

Schedule D diagram! If I make a disqualifying disposition with my ESPP stock, how do I report the sale on my Schedule D?

You report the sale for your capital gain or loss, regardless of...

Schedule D diagram! If I sell ESPP shares after the required holding periods, how do I report the sale on my Schedule D?

If you sell ESPP shares in a qualifying disposition, you still realize ordinary income in the year of sale and report it on...

Schedule D diagram! My company's ESPP is not tax-qualified under Section 423 of the Internal Revenue Code. How do I report any gain that results from the sale of my ESPP shares on my federal income-tax return?

Whether you immediately sell the stock or hold the stock and later sell it, you need to complete a Schedule D ("Capital Gains and Losses") for the year of the sale and file it with your Form 1040 federal income-tax return. You will need to know...

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