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**Gary2** · 08-11-2011, 05:27 PM

Originally posted by Edward View Post

The W-2 itself didn't reveal any hints of ESPP elements nor was there any codes in box 12:

It's normal for box 12 to have no entries for ESPP. It would be nice if box 14 or the stub had more info, but that's rare.

a. UNDER EARNINGS:
(1) Company Stock Match 7161.52

Based on the sample you provide later, this number seems awfully low. But my hope for this is that it implies the company has increased box 1 of the W2 by their match (which i believe they're required to do).

b. UNDER 'AFTER TAX DEDUCTIONS':

Code:

      (1)  ESPP Base Pay                        11122.51
      (2)  ESPP Commissions                      4127.67

      TOTAL FROM EARNINGS STMT:      $22,411.70

Is the employee paid partially on commissions? That would explain why there are two lines. Without seeing the entire sheet, my guess is that this is saying that about $15K of employee's pay, along with about $7K of employer match, was combined for a total of $22K used to buy stock throughout the year.

I don't think the $4K represents any sort of brokerage commission. It's conceivable, but my intuition says otherwise.

c. A total of 23 separate 1099B's received for 2010. Appears as tho funds were being withdrawn as soon as they accumulated, resulting in nonqualifying disposition on all 23 sales.

Agreed. With no discount, I think this should have no effect, as there's no ordinary income - it's all short term gain or loss.

d. Firm that did the prior year 2009 return made "one line" entry on Sch D showing the total sales as both the basis and sales price and with the addition of 650.00 in dividends paid, he ended up with a 650.00 capital loss. They completely ignored the ESPP elements on the Expanded Earnings as well as the entries on the Transaction Details for the year.

Do you mean commissions paid? That may be the right answer, but there's a risk the IRS won't match up against the 1099Bs and issue a CP2000.

If it really is dividends paid by the employee, I'd want to know more about the plan.

e. Following is a portion of data from the 2010 Transaction Detail:

Code:

DATE         TRANSACTION TYPE        CASH      SHARES      SH PRICE

01/05/10    Employee Contribution     416.52    0.0000      17.9200
01/05/10    Stock Purchase              0.00   23.8605      17.4450
0109/10     Employer Match Cont      1387.50   0.0000       12.1422
01/09/10    Stock Purchase              0.00   114.2709     12.1422
01/13/10    Withdrawal Dist         (2378.45) (138.1314)    17.2187

What is the significance of the format used above - is it supposed to be telling me something that I'm unaware of?

How would you enter the above on Sch D? How about the following:

138.1314 hrs; Date Acq: Various; Date Sold: 01/13/10; Gross Sales of 2378. and Basis of 1804. for a capital gain of 574?

(Let me know if my reformatting is incorrect.)

That entry would be my initial take on reporting it on the Sch. D. However, something weird is going on.

First, this suggests that between Jan 5 and Jan 13, the stock price fell by $5 and then came back up. That's possible, and should be easy to check through any online source of historic stock prices.

Alternatively, the price used for the employer match purchase was discounted, in which case there should have been a Form 3922, as well as more monies added into the W-2 for the additional wage income.

Setting aside the unusual stock price for the employer match, it still doesn't add up. If indeed there were 23 or 24 periods (i.e., every two weeks), and each one had $1,388 of employer match, that would be over $30K of match, far more than the $7K listed above. Or are the numbers for this purchase period much higher than usual?

f. There were no Forms 3922 provided because as stated on page 12 of Pub 525, there were no discounts provided to the stock sales in 2010 according to Fidelity. The page does have a sample on how to handle this but I'm having difficulty bringing alol this together. Any help on just how I should handle these 23 separate sales for the year would be greatly appreciated.

Usually I'm able to decipher the various statements. It may help to look at the transaction sheets and pay stubs, showing exactly how much was taken out of gross pay and how much cash was deposited for each sale. But with something this out of the ordinary, I'd be inclined to ask for the prospectus-type information that's usually furnished to employees before they even sign up for the plan.

**appelman** · 08-11-2011, 05:37 PM

Getting the needed info can be like pulling teeth

You might find these links helpful, although you might consider them too elementary:

Page Not Found -

http://fairmark.com/execcomp/espp/qualifying.htm

Page Not Found -

http://www.fairmark.com/execcomp/espp/disqual.htm

404 Not Found

http://josh.breittechnologies.com/blog/2008_03_24_Tax_Reporting_For_Employee_Stock_Purchase_Plan_ESPP

**joanmcq** · 08-12-2011, 02:35 AM

If the stock price is indeed fluctuating, you would have small gains or losses. If the dividends were not reinvested, they would not result in any additional basis, and the 2009 reporting was incorrect (it sounds like the preparer was either lazy or unknowlegable or both).

As indicated before, the share prices are easy to check via the internet. I have no idea what the 'ESPP commissions' represents. It's quite a bit to be paying as broker commissions. Ask more questions of your client (although it's likely he or she is clueless).

**Edward** · 08-12-2011, 11:22 AM

For Gary2:
Thanks for your input - my wife came down sick and thats why I haven't responded earlier - I will be responding shortly - thanks again.

Edward

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