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Nonqualified (nonstatutory) stock options are different than incentive stock options.

Steps

See Entering in Program - Form W-2.

Note. On a Married Filing Joint return, be sure to correctly assign ownership of the Form W-2 to the taxpayer or spouse.

Additional Information

Per IRS Publication 525 Taxable and Nontaxable Income, page 11:

Tax form. If you have income from the exercise of nonstatutory stock options, your employer should report the amount to you in box 12 of Form W-2 with code V. The employer should show the spread (that is, the FMV of stock over the exercise price of options granted to you for that stock) from your exercise of the nonstatutory stock options. Your employer should include this amount in boxes 1, 3 (up to the social security wage base), and 5. Your employer should include this amount in box 14 if it's a railroad employer.

If you're a nonemployee spouse and you exercise nonstatutory stock options you received incident to a divorce, the income is reported to you in box 3 of Form 1099-MISC.

Sale of the stock. There are no special income rules for the sale of stock acquired through the exercise of a nonstatutory stock option. Report the sale as explained in the Instructions for Schedule D (Form 1040 or 1040-SR) for the year of the sale. You may receive a Form 1099-B reporting the sales proceeds.

Your basis in the property you acquire under the option is the amount you pay for it plus any amount you included in income upon grant or exercise of the option.

Your holding period begins as of the date you acquired the option, if it had a readily determinable value, or as of the date you exercised or transferred the option if it had no readily determinable value.

For options granted on or after January 1, 2014, the basis information reported to you on Form 1099-B won't reflect any amount you included in income upon grant or exercise of the option. For options granted before January 1, 2014, any basis information reported to you on Form 1099-B may or may not reflect any amount you included in income upon grant or exercise; therefore, the basis may need to be adjusted.

CAUTION! It is your responsibility to make any appropriate adjustments to the basis information reported on Form 1099-B by completing Form 8949.

To enter the Form 1099-B:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click the menu icon in the upper left-hand corner, then select Federal
  2. Click Investment Income  in the Federal Quick Q&A Topics menu to expand the category and then click Gain or loss on sale of investments
  3. Click Capital gain or loss (Form 1099-B)
  4. Click +Add Form 1099-B to create a new copy of the form or click Review to review a form already created 
  5. The program will proceed with the interview questions for you to enter or review the appropriate information

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