When I left my previous employer, I retained on option to buy 1000
shares of their stock at $4. Finally after 9 years, the options were
about to expire, so I exercised all the options. I sent the company
$4000 and they transferred the 1000 shares to my broker. The stock was
$10 the day I exercised the options. I am still holding the shares.

Is my income equal to the difference between what I paid and what the
stock was worth on the day of the grant? In this example $6000.

I did not receive a W-2 or a 1099 from the company. Should I have
received something from them?

If I don't get a form from the company that documents the income,
where/how do I report it?

Thanks for any help,

Mitch

On Apr 3, 9:14 pm, bark...@yahoo.com wrote:

Are these qualified or incentive stock options. If incentive, then
the difference D (between what you paid and what the stock was worth
on the day of the grant, which is $6000 in your case) is added to your
AMT income on line 13 ("Exercise of incentive stock options (excess of
AMT income over regular t ax income)"). If these are non qualified
stock options, then the difference D gets added to your W2 income, and
you also have to pay social security and medicare tax. Normally your
employer is responsible for withholding these additional 2 taxes, but
you can file form 8919 ("Uncollected Social Security and Medicare Tax
on Wages") to pay the tax.

Incentive case: If you later sell the shares at $20 a share, then form
1040 will report the profit as $20000-$4000=$16000 minus commissions,
but for AMT the cost basis is $10, so I'm guessing that line...

On Apr 4, 1:34 pm, "removeps-gro...@yahoo.com" gro...@yahoo.com> wrote:

Thanks for your detailed answer. I'd like to further understand if
these are ISO or NQSO.

My understanding is that since I am no longer an employee, the options
automatically become NQSO regardless of their type when they were
granted. Does that sound correct?

On Apr 5, 2:46 pm, bark...@yahoo.com wrote:

There some rules about how to tell if an option is incentive, but they
don't make sense to me. Basically, the stock option plan must have
been approved by the shareholders. That would mean non qualified
stock options were not approved by shareholders? Pretty strange.

But coming back to earth, contact the brokerage or company to ask them
if they are ISO's. Also, look at documents of your stock options to
see if they use the word "incentive".

No.

Since you didn't receive a W2, it seems the company has nothing to do
with it any more in the sense of paying their portion of social
security ane medicare.