It is all too easy to make costly tax-return errors that attract unwanted IRS attention. Learn how to prevent mistakes...
Whether you still hold the ISO stock or you sold it in the past year, once you have paid AMT your tax returns get complex. The AMT is basically a prepayment of the tax on ISOs. You will get a credit for it in subsequent years, even when you have not sold the ISO stock. This means, for example, that you still need to...
It's not that simple. AMT requires you to account separately for ISO shares not only at exercise but also when the shares are sold. If you paid AMT as a result of exercising ISOs, your sale of the ISO shares provides an opportunity for you to recover...
Generally, if you find a tax-return error and the statute of limitations period has not yet ended, you are required to file...
Major changes have occurred in tax-return reporting in recent years, making accurate tax-return reporting more complex and difficult...
Form 1099-B or the equivalent substitute statement is necessary for the accurate completion of your tax return. Five facts you must know about this reporting to avoid tax-return mistakes are...
If you sold shares during the calendar year, your brokerage firm will issue IRS Form 1099-B by mid-February of the following year. This is an important document that you must have to complete your tax return for the year of sale...
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...
From our interpretation of the forms and their instructions, myStockOptions.com recommends the following reporting steps to avoid overpaying taxes...
By selling the ISO stock when you exercised it, you eliminated the spread at exercise from the...
To report the sale of shares in a sell-to-cover exercise, you complete Form 8949 along with Schedule D for the year of...
After you have held the stock more than two years from grant and one year from exercise, the spread between the exercise price and the sale price is...
With ISOs, it is always the sale that triggers taxes. The rules are similar to those that apply to sales of ISO shares made in the same year as exercise; the difference is that...
The calculation of the amount of ordinary income and capital gain/loss will vary according to the...
The details of the shares you sold go on Form 8949, and Schedule D collects just the column totals from that form. The instructions of Form 8949 require you to...
IRS/Treasury regulations on ISOs clarify that the amount of ordinary income in a disqualifying disposition is...
In any tax year, stock compensation income, such as from an NQSO exercise, an ISO or ESPP disqualifying disposition, or the vesting of restricted stock, can raise your income tax and make your return complex. Mistakes include not paying taxes owed with...
You should almost always receive Form 1099-B. The only exception occurs if certain requirements under IRS Rev. Proc. 2002-50 are met. This revenue procedure allows...
This is an area in which mistakes often occur. The cost basis, also called the tax basis, is calculated in the following way...
This type of situation, in which the disqualifying disposition does not appear on the W-2, is more likely to occur when...
The tax law says that you can offset losses against only the same type of income...
While you lose the opportunity to have the lower long-term capital gains rate apply to the difference between the exercise and sale price, the alternative minimum tax (AMT) no longer applies. You do have compensation income and perhaps short-term capital gains equal to...
No. All or part of it may be ordinary income. You have capital gains only when you...
The mistake that triggered the notice is easy to make with a cashless exercise. Because the stock sale upon a cashless exercise does not generate any gains, taxpayers often do not realize that they still need to report the sale on Form 8949 and Schedule D of the Form 1040 tax return...
Yes, significantly. In addition, fluctuations of income, which can be caused by stock compensation, are a red flag that can trigger an audit. According to research...
Let's first review the tax rules and the W-2 reporting. The tax basis for...
The AMT rules and forms baffle even tax professionals. You can better understand the process by...
The AMT system is complicated. Broadly, it starts by taking your adjusted gross income, subtracts your itemized deductions, makes certain negative and positive adjustments, and includes certain tax items called tax "preferences." The resulting amount...
If you owe AMT for the tax year in which you exercised an ISO, all or a part of the amount by which your AMT liability exceeds your regular tax liability can generate a tax credit that may...
When you trigger the alternative minimum tax (AMT) from an ISO exercise, you create dual-basis stock. This means that for the purposes of calculating your AMT gain and adjustment, the basis of the shares will be calculated differently for the regular tax and for AMT. For your regular tax, the basis is...
If you simply lack the funds to pay your income tax, you may want to apply for a payment agreement on the...
To eliminate the tax, you would have had to sell the stock in the calendar year of your exercise. While some general approaches to this situation exist, only with ISO stock is there a possible escape hatch. Fortunately...
Unlike with a stock sale, gifting ISO stock does not result in an AMT adjustment for the difference...
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...
Tax errors can be costly! Don't draw unwanted attention from the IRS. Our Tax Center explains and illustrates the tax rules for sales of company stock, W-2s, withholding, estimated taxes, AMT, and more.
Test your knowledge with our 