Hi again Colin
Your response is much appreciated, please indulge me one more time to see if I understand this ... so I don't make the same mistake in the future....you wrote
Rutgers, Your accountant is probably right on the ball! Generally, stock options give you ordinary income, not capital gain. BUT if you then sell the stock received for more than your tax-basis in the stock, THAT would be a capital gain.
In my case, for simplicity sake, I had options representing 100 shares at $20 strike price for my company stock. When the stock hit $30/sh, I exercised the 100 options and immediately flipped them. Thus, I thought I had a capital gain of 100 shares x $10/sh, or $1,000.
It seems to be that you are saying that the $1,000 is ordinary income; however, if I had NOT flipped them, but rather held onto the shares and then the shares increased to $40/sh, and I sold at $40, then I would report $1,000 ordinary income and $1,000 capital gain.
Do I have it right, now?
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