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ESPP cost basis calculation by TurboTax seems incorrect

Forum|Forum|7 years ago
June 6, 2019
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TurboTax Premier Windows

Best answer by TomYoung

In the case of a Qualified sale the compensation income is the lesser of

The discount applied to the grant price: 15% x $26 x 31 = $120.90

The actual gain based on your out of pocket cost 31 x ($29.39 - $18.36) = $341.93

(Tax regulations issued in 2009 specify that in some situations the end of the offering period (when you purchase the shares) will be considered the grant date. Your company should inform you if this is the case.)

Tom Young

L

labrat1Author

I sold certain shares of a company purchased via ESPP obtained @ a 15% discount as a qualifying disposition but TurboTax seems to be calculating the cost basis as incorrect.

L

labrat1Author

The share price was $26 on grant date and $21.6 on offering end date. So it was purchased @ 18.36 ( 15% discount on $21.6).

L

labrat1Author

No of shares are 31. The compensation income should be $100.44 but TurboTax somehow calculates it as $120.90 which I do not understand. Please clarify

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labrat1Author

compensation income should be 21.6 - 18.36 multiplied by 31 shares right?

T

TomYoung

Employee

Can't really say because you've left out how much you sold the stock for.

L

labrat1Author

OK , Sure 29.39.

T

TomYoungAnswer

Employee

In the case of a Qualified sale the compensation income is the lesser of

The discount applied to the grant price: 15% x $26 x 31 = $120.90

The actual gain based on your out of pocket cost 31 x ($29.39 - $18.36) = $341.93

(Tax regulations issued in 2009 specify that in some situations the end of the offering period (when you purchase the shares) will be considered the grant date. Your company should inform you if this is the case.)

Tom Young

R

rysilva

This is really helpful and also really weird. I had stock worth $76.27 at beginning, $57.90 at end, purchase price $49.22. I sold at $67.51. It seems so strange to me that my "income" portion is 15% of $76.27, an amount that could never have actually been real income, especially when the actual discount my company gave me was 15% off $57.90.