ESPP tax question

Forum|Forum|4 years ago
March 27, 2022
1 reply
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I sold ESPP shares for the first time in 2021. These are qualifying shares purchased in the 1990s, and all sold with long-term gain. Situation 3 in this article is exactly my situation:

https://turbotax.intuit.com/tax-tips/investments-and-taxes/empl[product key removed]ase-plans/L8NgMFpFX

I don't recall if the discount of these shares were reported on my W-2 forms for the years they were acquired. These shares were not recorded as ESPP at the brokerage. After the sale, they sent me a 1099-B form with Dates Acquired and Cost Basis for all the shares sold. I have no record of 3922 or W2 forms from the employer, as mentioned in this video:

https://www.youtube.com/watch?v=66Gzu9vZqb4

I will be using TurboTax Premier for the 2021 filing. Questions:

- Will TurboTax guide me through how to enter all the information, including the shares' Offering and Exercise dates and prices, etc. to calculate the company discount?

- Will the company discount be added to the 1099-B cost basis?

Thanks in advance.

Best answer by GeorgeM777

Thanks. I have the Premier CD, and running on my Win10 desktop.

Will TurboTax guide me to enter line 8 on Form 1040? Or do I have to enter it manually?

At what point will TurboTax guide me on the ESPP sale?

Yes, TurboTax will enter the other income on line 8. You will not need to manually enter the other income appearing on line 8 of Form 1040. Follow the steps in the previous post to enter the line 8 other income. For the ESPP transactions, follow these steps:

go to Wages & Income under Federal Taxes.
At the page "How do you want to enter your income?" select "I'll choose what to work on."
Scroll down to Investment Income, and select Stocks, Mutual Funds, Bonds.
Answer the questions accordingly.
You will get to a page Was this a sale of employee stock? Select Yes.
You will then see the page What type of employee stock is this? You will see the option to select ESPP.
Continue through the section responding to the questions as they appear.

@amt_blues

D

DavidD66

Yes, TurboTax will guide you through entering all aspects of your sale of ESPP stock. In addition to the long term capital gain, it will calculate the compensation that needs to be reported, and add it to line 7 of your W-2. Your company would not have reported any compensation on your W-2 when you acquired the shares. Compensation is only realized (and reported) when you sell the shares.

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A

amt_bluesAuthor

Employee

Thanks for the response and explanation.

A little confused about the W-2. After the sale, I did not receive a W-2 from the company. I left the company decades ago, and I'm not sure if they have my current contact information. Is this a problem I need to resolve?

G

GeorgeM777

No, it will not be a problem. To follow-up on the comments from @DavidD66, even if you don't have a W-2 from your employer you can report this amount as compensation income on line 8 of your Form 1040. Line 8 on Form 1040 is the line for "Other Income." Follow these steps to report the ordinary income aspect of your ESPP as other income: