Calculator Inputs
Example Data Table
| Scenario | Type | Shares | Strike | FMV at Exercise | Sale Price | Exercise Fee | Sale Commission | Regular Basis |
|---|---|---|---|---|---|---|---|---|
| Employee exercised and sold later | ISO | 1,000 | $10.00 | $25.00 | $40.00 | $75.00 | $45.00 | $10,075.00 |
| Nonqualified exercise with immediate income inclusion | NSO | 600 | $12.00 | $18.00 | $20.00 | $60.00 | $35.00 | $10,860.00 |
| ISO disqualifying sale within one year | ISO | 800 | $8.00 | $15.00 | $14.00 | $50.00 | $30.00 | $11,250.00 |
Formula Used
Exercise Cost = Shares × Strike Price
Bargain Element = Shares × max(FMV at Exercise − Strike Price, 0)
Estimated Ordinary Income = NSO spread, or estimated ISO disqualifying income, unless you enter an override.
Regular Cost Basis = Exercise Cost + Exercise Fees + Ordinary Income Included
AMT Basis for ISO = Exercise Cost + Exercise Fees + Bargain Element
Net Sale Proceeds = Shares × Sale Price − Sale Commission
Regular Gain or Loss = Net Sale Proceeds − Regular Cost Basis
AMT Gain or Loss = Net Sale Proceeds − AMT Basis
For ISO qualifying treatment, the calculator checks for at least one year from exercise to sale and at least two years from grant to sale.
How to Use This Calculator
- Choose whether the option is ISO or NSO.
- Enter shares, strike price, and fair market value at exercise.
- Add exercise fees and any expected sale commission.
- Enter grant, exercise, and sale dates to test holding-period rules.
- Type a compensation income override only when payroll or broker records already show a different reportable amount.
- Submit the form to view the result block above the calculator.
- Download the result summary as CSV or PDF for records or review.
Frequently Asked Questions
1. What does cost basis mean for stock options?
Cost basis is the amount used to measure gain or loss when shares are sold. It usually starts with exercise cost and may include fees and reportable compensation income.
2. Why does NSO basis often increase at exercise?
NSOs usually create compensation income at exercise when fair market value exceeds strike price. That reported income generally increases regular tax basis in the acquired shares.
3. Why does the calculator show an AMT basis for ISO?
ISO exercises can create an AMT adjustment based on the spread at exercise. AMT basis helps estimate later AMT gain or loss if those shares are sold.
4. What is a qualifying ISO disposition?
A qualifying ISO disposition usually requires selling at least one year after exercise and two years after grant. Meeting both tests can change how income and gain are characterized.
5. When should I use the compensation income override?
Use the override when payroll records, a Form W-2, or broker statement already shows taxable compensation that differs from the calculator’s estimate.
6. Does sale commission affect basis or proceeds?
This calculator subtracts sale commission from sale proceeds. Exercise-related fees are added to basis because they are acquisition costs tied to obtaining the shares.
7. Can I use this calculator before selling the shares?
Yes. Leave sale details empty to estimate exercise cost, bargain element, regular basis, and AMT basis without generating sale gain or loss figures.
8. Is this calculator enough for filing taxes?
No. It is a planning tool. Final reporting can depend on brokerage adjustments, payroll inclusion, holding-period details, corporate actions, and jurisdiction-specific tax rules.