Question

Cost basis for qualifying disposition of ESPP sale?

Forum|Forum|5 years ago
March 21, 2021
1 reply
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Hello,

I need to report sale of a qualifying disposition (long-term) ESPP shares, and I am not sure how to enter the cost basis. First, I imported all of my investment activity from Etrade which correctly entered the information for this particular sale as long-term, including the correct sale proceeds and cost basis.

However, what I do not know is if I need to enter the "adjusted cost basis". I know I have to do this for disqualifying disposition (short-term) sales, but do I need to do the same for long-term sales?

Etrade did provide me a supplemental form which has the cost basis (matches to what TT imported) AND an adjusted cost basis.

The gain for this sale is not reported on my W2 like the disqualifying dispositions are. Can someone help me report this correctly in TT?

Thanks in advance!

D

DavidD66

A portion of your gain must be reported as ordinary income. I recommend entering the transaction in yourself, as opposed to importing from the broker. When entering your Form 1099-B, you will see the question "What if I sold employee stock" click on that button and then indicate "I'll enter one sale at a time". Enter the information on your 1099-B, and then click on "Guide me step-by-step". The program will guide you through entering you ESPP information.

For more information on the taxation of shares purchased through an Employee Stock Purchase Plan, see: Employee Stock Purchase Plans

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C

chris4701Author

Hi DavidD66,

Thanks for your help. I have already imported the transaction and updated the adjusted cost basis per my brokerage's supplemental statement. What I need to know is how to enter the gain as ordinary income - is there a manual way of doing so? According to https://turbotax.intuit.com/tax-tips/investments-and-taxes/empl[product key removed]ase-plans/L8NgMFpFX, I must enter the income into line 7 of my 1040 but I don't see how I can do this when I go to "Forms".

Thanks

AmyC

Employee

It should already be in your wages, box 1 on your w2. You should not need to add ESPP income to line 7 wages. That increase in your wages is what caused you to adjust the basis to include wages plus sales expenses in the basis.

Double check your w2. Call HR if you don't have a statement with the breakdown.

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