Non statutory stock options w/o 1099-B

[AZ-Tax]

Client never received a brokerage statement but provided me with a document with amts that fits well with past non statutory options but in the past the IRS always wanted the options reported on Sch D which always resulted in a very small (less then $100) negative amt that represented the trading fees and the option gain was reported on the W-2. My only concern is will the IRS later on request the Sch D as it did with a few other clients of mine over the yrs. What appears on the document provided is:
Option date:
# of options:
Grant price:
Grant value:
6/29/2010 price:
6/29/2010 value:
Option gain:

Subtracting the "grant value" from the "6/29/2010 value" = "option gain" so math looks correct etc. I suppose I could report on Sch D with the net results being "0". Any suggestions?

[solomon]

Was there an actual sale or just the exercise of the option?

[AZ-Tax]

They had to be exercised

I was not aware company vested options were marketable. I was under impression you had 2 options for the options (that kinda funny): 1 exercise which is the most usually way 2. allow them to expire becasue the current or past employee lost track of reality.

Yes, they had to be exercised if the "option gain" amt appeared on the W-2 under V code. I recall my past clients exercised their options and recieved a 1099-B but would it make a difference if the company is public vs private? I am beginning to think that may be the factor here.

UPDATE: something is odd here. The amt on the W-2 with the code V is slightly higher then the "option gain" amt. Anyone know what that is?

[solomon]

I was not aware company vested options were marketable. I was under impression you had 2 options for the options (that kinda funny): 1 exercise which is the most usually way 2. allow them to expire becasue the current or past employee lost track of reality.

Yes, they had to be exercised if the "option gain" amt appeared on the W-2 under V code. I recall my past clients exercised their options and recieved a 1099-B but would it make a difference if the company is public vs private? I am beginning to think that may be the factor here.

Yes, when exercised the bargain element will appear on the W-2 with code V. However, in absence of a 1099-B a sale may not have occurred and the TP still holds the stock.

On the other hand, as you mention, perhaps if the company is private has a bearing on it.

More than once I have seen the former - i.e. exercise but not sell at that time,

[Gary2]

I was not aware company vested options were marketable. I was under impression you had 2 options for the options (that kinda funny): 1 exercise which is the most usually way 2. allow them to expire becasue the current or past employee lost track of reality.

Yes, they had to be exercised if the "option gain" amt appeared on the W-2 under V code. I recall my past clients exercised their options and recieved a 1099-B but would it make a difference if the company is public vs private? I am beginning to think that may be the factor here.

UPDATE: something is odd here. The amt on the W-2 with the code V is slightly higher then the "option gain" amt. Anyone know what that is?

In theory, for a publicly traded company the options could match a publicly traded option, so that they would have a clear FMV when vested. In such cases, the employee would have income at the vesting time, without exercising them. Often the company will force an exercise and sale to cover the withholding tax due at that time because of the income.

In any event, the code V amount is based on the fair market value of the stock, which is the average of the high and low prices for the day. The sale price, on the other hand, will be the price received for that particular sale, which could be different.

[Burke]

From the information you give, it does not appear the TP has actually sold the stock. He should know if he got any money. Ask him. And most companies use the same brokerage to handle these sales year after year. He could call them if he doesn't know. If he has not sold it, nothing goes on D.