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Allen exercised a nonstatutory stock option and purchased shares of his company's stock on Octobe...

Allen exercised a nonstatutory stock option and purchased shares of his company's stock on October 31, 2016. He purchaed the shares for less than fair market value. That year, he included $3,000 in compensation income from exercising his option. On December 5, 2018, Allen sold the stock for a profit. When he received a 2018 form 1099-B from his broker reporting details of the sale, he noticed that his cost basis did not include the $3,000 compensation element from 2016. When Allen files his 2018 return, how does he report his final cost basis for the transaction on Form 8949?

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Answer #1

As Allen missed to add compensation element (3000$) from 2016 , he needs to report it to IRS,on 1099B Form ,starting from 2018 onwards .

If any correction or adjustment is required ,you need to fill it to the form of 8949,in instruction section under column G . There,you need to specify the required correctoin on a separate form of 8949 and need to report it to IRS.

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