I recently sold my vested incentive stock-options back to my employer (i.e. so rather than having to spend $20,000 of my own money to exercise my options and make very little paper gain initially, I opted for a larger cash gain more immediately (e.g. $10,000) instead). I received the money in my bank account a few days ago.
How is this money taxed? There hasn't been any withholding from the money I received - and it isn't money received in exchange for me doing any work (i.e. not W-2 or 1099-MISC). While it's money received from the sale of an asset, I'm confused as to what the cost-basis would be (the options vested accrue weekly during my employment). Is there special handling for this?