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Employee stock purchase shares sold that are showing part as ordinary income but stock was purchased 20 years ago, why?

Forum|Forum|7 years ago
June 6, 2019
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I don't have a w2 but shows in supplemental information on my 1099 B and I have a letter from time I purchased showing the discount amount.

TurboTax Deluxe Online

Best answer by DavidD66

For a discounted Employee Stock Purchase Plan, the discount amount on your purchase is taxed as ordinary income, when you sell the stock, whenever you sell the stock, but not until you sell the stock. Classifying part of your gain as ordinary income is correct.

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DavidD66Answer

For a discounted Employee Stock Purchase Plan, the discount amount on your purchase is taxed as ordinary income, when you sell the stock, whenever you sell the stock, but not until you sell the stock. Classifying part of your gain as ordinary income is correct.

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TomYoung

Employee

Well, no. In a qualified sale - which this surely is - the calculation of gain and the compensation amount - if any - is different than for disqualifying sale.

If you report the sale using the ESPP "guide me" interview TurboTax will calculate the compensation - if any - and report that amount to you at the very tail end of the "Stocks, Mutual Funds, Bonds, Other" interview. It will then ask if this compensation is reported on the W-2. Answer "No" and TurboTax will include that amount on line 1 of the Form 1040.