Nonqualified stock options become taxable at exercise (purchasing the stock shares). The difference between the purchase price (established in the grant of the option) and the value on the date of exercise. That difference is included in the employee's W-2 and shown on box 12 code V. If shares are sold to cover the taxes (federal and state withholding, and social security and medicare tax) the shares are also a reportable transaction. However, the basis for the shares on the brokerage statement will only include the amount included in the W-2 for cost basis. The balance of the basis is the amount paid for the shares acquired in the exercise. The employer should provide a statement showing the option transaction and that should give you the cost of those shares. The IRS does not allow the brokerage company to include the purchase cost in the sale reporting of cost basis.