Which code represents income from the exercise of stock options?

Income from the exercise of stock options is specifically reported using Code V on Form W-2. This code indicates the amount of income that an employee has recognized from the exercise of nonqualified stock options. When employees exercise these options, the income is included in their wages for tax purposes, and it is reported to the IRS.

The inclusion of Code V helps the IRS track earnings derived from stock options, which can be essential for calculating the tax implications of these transactions. By ensuring accurate reporting through this specific code, both the taxpayer and tax authorities can reconcile the income recognized from the exercise of those stock options with the relevant tax obligations.

Understanding the significance of different codes on Form W-2 is crucial for managing income tax filings effectively, particularly regarding various forms of compensation like stock options.