I had received some restricted stock options at no cost to me in 2008. The company I worked for was bought out by a larger company and they cashed out my restricted stock option with a cash payment. I paid the taxes on the cash received for my RSUs and it is reflected on my W-2 Form as ordinary earned income. I then received a 1099-B reflecting the same amount (that is already included on my W-2) but the 1099-B did not showed that I paid any taxes on it. I assume that I have to report the 1099-B on my schedule D, but does this mean I am being double taxed and have to pay taxes again? :confused:

By the way - I received approx $5 in cash for my RSU. And paid about $2.5k in taxes already reflected on W-2.

The 1099-B showed an amount for $5k.

Please help!!

Since you already paid the tax on the difference between the option price and the redemption price as compensation, you cover the 1099-B by reporting the sale on Schedule D and listing the sales price as the purchase price, showing NO capital gain.

If there was admin or sales commission charge when the stock was redeemed, add that charge to the basis and you will have a short-term LOSS.

I have done this a number of times, and though it makes little sense, that IS the way the IRS expects the sale to be reported.