Question

I need to know how to calculate cost basis for stock sale. How do I calculate cost basis if I exercised my company stock options?

Answer

Your basis in the stock depends on the type of plan that granted your stock option.

Regarding how to how to calculate cost basis for stock sale, you calculate cost basis using the price you paid to exercise the option if both of these are true:

  • The plan was an incentive stock option or statutory stock option.
  • The stock is disposed of in a qualifying disposition.

If the stock was disposed of in a nonqualifying disposition, the basis is the sum of these:

  • Option price
  • Any income reported on your W-2 as a result of the disposition

If the plan was a nonstatutory stock option, your basis is the sum of these:

  • Price you paid for the stock
  • Any ordinary income reported on your W-2 when you exercised the option

 

Related Topics

Related Resources

Garage Sale Money and Capital Gains: What You Should Report to the IRS

Do capital gains apply to garage sale money? The answer depends on a number of factors. Learn more at H&R Block.

For Pro Golfers, Tough Taxes Are Par for the Course

Professional golfer taxes can be complicated and confusing. Learn more about tricky golfer tax issues like travel deductions and residency rules with H&R Block.

How Renting Out Your Extra Bedrooms Affects Your Taxes

Thinking about renting out a room in your home? Learn more about the potential tax implications with the experts at H&R Block.

How do I calculate taxable income?

Finding your taxable income is an important part of filing taxes. Learn how to calculate your taxable income with help from the experts at H&R Block.