Stock Options and Wash Sales

[think2much]

Client exercised his nonstatutory stock options for several consecutive weeks during the year. Each was a same-day exercise/sell order.
The income from the stock options is properly included in box 1 of his W-2 and identified as code V in box 12.
The brokerage (Fidelity) also sent him a 1099-B for the proceeds from the sale of the exercised shares. On the supplemental info sheets that accompanied the 1099-B, each of these transactions has a small loss (transaction costs?) but these small losses are shown as wash sale disallowed losses.
Should the wash sale rule apply in this case? It seems to me that each subsequent exercise/sell order is not quite the same as purchasing replacement shares. Please comment. Thanks.

[winnie]

options

Please correct me if any assumptions are incorrect.
I have never thought the wash sale rules apply to stock options, unless he is did not immediatly exercise and sell.

From your description, that did not happen here. Your client exercised stock options and AT THE SAME TIME, sold them. So your client "bought" the stock for the money he "paid" and for the amount included in his w2. Then he immediatly sold the stock. Note that your client did not write a check for what he "paid", the amount he paid was deducted from the proceeds of the stock sale. Then his company took out a ton of taxes and your client got a few bucks or maybe a lot of bucks. His cost will equal FMV of the stock at the time, which will equal his option cost plus what was added to his w-2 with a code of "V" in box 12. The commissions and fees reduce what he received and that amount is usually the loss on the transaction. The full amount of the sale and the full amount of the cost needs to be reported on Sch D, with the loss being the fees.

[think2much]

Stock Options and Wash Sales

winnie,
My client exercised a block of his options and sold the shares on the same day. He did the same for a few more blocks in the weeks following. The same-day exercise/sell orders for each block were less than 30 days apart, but sounds like you agree with me that the wash sale rule should not apply here.
I'm just wondering why the brokerage would show the losses (from transaction fees) as disallowed wash sale losses...

[winnie]

You can ask them why they did that

and I understand that you certainly need to think about all info that you are presented with.