Your Tax Question - 030

Dear John, I was given stock options as a bonus several years ago, and I was required to "exercise" them in 2009. I have a receipt showing the estimated price at exercise, broker proceeds, grant price/share, taxable amount, tax rate, estimated tax, and net income. At the bottom it says that local payroll will pay the taxes and distribute the remainder as income. It looks like everything was taken care of, and the net proceeds were less than $1000 (woo hoo -- some bonus!). How do I declare this? Is it on the misc income section of the tax return? Thanks, Frank
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Hi Frank,

The simple answer is: "You have a long term gain which gets entered on 1040, Line 13"

The more informative answer:

Employers and banks have until January 31 to have W-2 and 1099 forms mailed. Brokerage houses, on the other hand, have until February 15 to have 1099-B forms mailed to clients -Your exercised stock options fall into this 1099-B category. The information from the 1099-B will be used to fill out 1040 Schedule D which when finished will be used to fill in Line 13 of your Form 1040.

Welcome to the world of stock options!

Good luck,
John

PS. I still have room on my client list if you need me to handle this for you. email me