Confused - Nonstatutory(nonqualified) Stock Options

[DexEA]

Nonstatutory Stock Options:
The amount included as taxable compensation is the FMV of the stock on the exercise date minus the amount paid.
Compensation is reported to an employee in box 1, Form W-2, and in box 12 with a cod “v”.
Income and employment taxes are withheld on this income.
The employee’s basis in the stock is the amount paid plus the amount included in compensation.
~~~~~~~~~~~~~~~~~~~~~~~
W-2 with code V in box 12 = $40,000
1099B from broker has noncovered security, basis not reported to the IRS, sales price of $26,000, date of exchange and Quantity Sold. No other information.

Does this mean the stock must have been purchased before 2011?
Or is it Noncovered because it is a nonqualified stock plan?
If the broker does not have the stock purchase information would the Employer?

Or should I be able to figure it out with the information given with the $40,000 already included in income on the W-2 so would the basis equal the 1099B proceeds?
So the $40,000 is ordinary income and the capital gain (loss) = $Zero?

[ddoshan]

Agree that something does not seem to make sense. If I followed correctly, it appears that the client paid more for the stock than what they sold it for which does not really make sense. There would seem to be some information missing here. Maybe the client did not sell all the shares in the 26,000 sale. Or there may have been two separate sales dates.

[FEDUKE404]

Possibilities

1 - The client could have sold some "old" stock during 2012. Some folks actually prefer LTCG over STCG.

2 - The client could have exercised, during 2012, employee stock options (creating an event on the W2), but sold some/none of that specific (newest) stock.

You cannot prepare a Schedule D merely from what is shown on a Form W2. Get the full story, and the pieces should come together.

FE

[DexEA]

Taxable Compensation = FMV of stock – amount paid for stock.

So if sold when exercised the sales price as reported on the 1099B would be the FMV ($26,000) less $XX(amount paid) = Taxable comp reported on W-2($40,000), which would be a loss.

If the exercised options were sold, it would seem only a portion of the stock was sold, or what was sold could have been “old” stock.

I’m wondering if this is why the cost is not reported on the 1099-B, it was purchased pre-2011 before the “covered” and “noncovered” came into play?

Or is it because Scottrade would not have the basis as it was purchased thru the option?

I apologize for the ignorance, I am just trying to figure out the possibilities and get my facts straight before I start asking questions and have this person think I’m a total idiot.