Stock options sale and 1099-B

[DTS]

Is it always necessary to issue a 1099-B for the sale of options? A client's HR is telling him they were sold, but there is no form reporting this and I'm telling him to extend until I can find out if one was reported to the IRS.

Thanks,

D

[Lion]

Report

You need to report his sale of stock options whether or not it was reported to the IRS. In fact, I have seen letters from companies telling their employees that no Forms 1099-B will be issued, to save their documentation for tax purposes.

[S T]

Employer

Sometimes they are sold through Employer and then there is no 1099B issued, most of the time though it is through a brokerage house, such as Schwab, Ameritrade or Etrade. I had a client give me just Employer paper work this year, and when questioned, he sent me an Etrade statement that had the transaction listed.

Sandy

[DTS]

You need to report his sale of stock options whether or not it was reported to the IRS. In fact, I have seen letters from companies telling their employees that no Forms 1099-B will be issued, to save their documentation for tax purposes.

Yes, I intended to do so. We are not sure of how much they were sold for. There's so much confusion on this sale.

D

[DTS]

Sometimes they are sold through Employer and then there is no 1099B issued, most of the time though it is through a brokerage house, such as Schwab, Ameritrade or Etrade. I had a client give me just Employer paper work this year, and when questioned, he sent me an Etrade statement that had the transaction listed.

Sandy

This sale was done through a third party and that is why I'm sure the doc should have been issued. Each one is pointing the finger to the other person when asked.

D

[AZ-Tax]

ISO's, RSU's, ESPP can be a nightmare...

I too like Lion have seen letters from employers stating no 1099B will be issued. In the last 3 yrs I have had 2 clients recieve letters from the IRS about not reporting it. In both cases the taxpayer did not know they had to report it so never disclosed to me. This is an example of the lengths the IRS will go because upon amending these 2 tax returns, the IRS gain $0.

DTS, is there as ISO amt in box 14 of the taxpayer W-2?

I just had a situation where as a client sold restricted stock units and participated in a ESPP. No where on this clients W-2 did it indicated anything. He did recieve a 1099B on the ESPP but none (or so he says) on the RSU's. Finally he found a statemet that indicated he paid fed, st, fica etc.on RSU. He never did find out if he paid the same taxes on his ESPP but was absolutely positive he did. I had him email telling me that both the RSU's and ESPP proceeds was included in box 1 of his W-2. The main reason is to hopefully protect myself and just as importantly, its the unpaid time you need to put in if my client receives a from IRS letter. If he does receive a letter, at least I can refer back to that and say I asked you that and now I am going to have to charge you.

[DTS]

I too like Lion have seen letters from employers stating no 1099B will be issued...DTS, is there as ISO amt in box 14 of the taxpayer W-2?...

No, nothing has been listed on the W-2s in past years. I had him go through bank statements to see if anything showed up. He did find two large deposits matching amounts he was told were net amounts included in wages. Printed sheet he rec'd is almost useless and confusing, at best.



D

[Lion]

Extension

Put him on extension. Make it his job to get reporting from the brokerages that sold the securities. Sometimes, with the company letter plus the brokerage 1099-B or at least the sales confirmation, a pattern emerges so you can tell what happened.

[DTS]

Yes,

he went on extension yesterday and his check is in the mail to the IRS.

D