imadthegreat
Apr 24, 2015, 05:06 PM
I have a strange case. Here is the sequence of what happened.
1. I worked for Composite Software until May 2013. Taxes were withheld from salary I received and reflected on W2 at the end of year. So far hunky dori.
2. I had incentive stock options at Composite Software. Just before I resigned, I exercised my options and bought whatever I was eligible for.
3. Less than a month after I left Composite, Cisco acquires Composite.
4. Before the end of year 2013, I surrender my stock certificate and get some money for my shares (some money was held in escrow acocunt- but don't worry about that now).
5. This income went unreported. Cisco did not reported it.
6. No, I didn't cheated. Very honestly I reported the check I received minus option strike price I paid to Composite to acquire my stocks.
7. Since, this was short term gain, my income was taxed at regular income tax bracket I fall in.
8. I paid my taxes. Life was good and peaceful.
9. In early 2015, Cisco realized that they should report the stock payment on wages and salary and created a new W2C and reported to IRS my ISO income.
10. IRS says that this new income is reported to them which I didn't include in my 1040 and I owe them additional $2100 in taxes plus 3% interest.
11. Now, Cisco is willing to give me a letter (which apparently they already sent), that says its ISO income. If I give that to IRS, they will get off my back. Again, hunky dori.
12. Now, here is the problem. Cisco is reporting some amount X which is less than half of what I received and I already reported. May be I don't owe taxes on all of it. In that case, should I submit a corrected 1040 and this time eliminate anything that was not reported and pay taxes on reported income? That way I can probably get $2500 back instead of owing them $2100.
Why do you think Cisco is reporting less than the check they paid me for my stocks (I have asked them this question but waiting for their reply)?
1. I worked for Composite Software until May 2013. Taxes were withheld from salary I received and reflected on W2 at the end of year. So far hunky dori.
2. I had incentive stock options at Composite Software. Just before I resigned, I exercised my options and bought whatever I was eligible for.
3. Less than a month after I left Composite, Cisco acquires Composite.
4. Before the end of year 2013, I surrender my stock certificate and get some money for my shares (some money was held in escrow acocunt- but don't worry about that now).
5. This income went unreported. Cisco did not reported it.
6. No, I didn't cheated. Very honestly I reported the check I received minus option strike price I paid to Composite to acquire my stocks.
7. Since, this was short term gain, my income was taxed at regular income tax bracket I fall in.
8. I paid my taxes. Life was good and peaceful.
9. In early 2015, Cisco realized that they should report the stock payment on wages and salary and created a new W2C and reported to IRS my ISO income.
10. IRS says that this new income is reported to them which I didn't include in my 1040 and I owe them additional $2100 in taxes plus 3% interest.
11. Now, Cisco is willing to give me a letter (which apparently they already sent), that says its ISO income. If I give that to IRS, they will get off my back. Again, hunky dori.
12. Now, here is the problem. Cisco is reporting some amount X which is less than half of what I received and I already reported. May be I don't owe taxes on all of it. In that case, should I submit a corrected 1040 and this time eliminate anything that was not reported and pay taxes on reported income? That way I can probably get $2500 back instead of owing them $2100.
Why do you think Cisco is reporting less than the check they paid me for my stocks (I have asked them this question but waiting for their reply)?