Qualifying Disposition of Employee Stock Purchase Plan

[peggysioux]

Taxpayer received a statement from investment company showing disposition date of 12/12/13 of qualifying disposition shares from an ESPP for a total sales price of $4000, but taxpayer is stating that he did not sell any shares in 2013. He also received no 1099-B for any sale of stock. It looks to me that he sold shares, but wouldn't he be aware if he sold or not?? I have not dealt with many stock sales from ESPP and I have to refresh my memory every time I deal with these. My questions are:

Being he received the statement showing disposition date and disposition shares and total sales price, he definitely sold shares, correct?

Secondly, the statement shows taxable compensation - would the taxable compensation already be added to his W-2, or do I need to report the taxable compensation on line 7 and list as "ESPP Ordinary Income"?

Your help during this crunch time is appreciated.

Peggy Sioux

[Roland Slugg]

Hmmm! I would sure think he would know if he sold some shares during the year. December 12, 2013 wasn't very long ago. Maybe he just exercised the option. Or maybe he exercised and sold at the same time and is confused. It seems very unlikely that the transfer agent who sent him the information would have it all wrong. In any case you need to have your client get the correct facts for you.

As for your other Q, the ordinary income portion may or may not be included in box 1 of his W-2. According to the instructions for form W-2, it does not appear such income is required to be included there. Again, your client should try to find out. He may be able to tell by studying his pay statements around the time in question. In the absence of a definitive answer, I would probably NOT add it to his W-2 income. The ordinary income amount can't be very much ... can it?

Sorry I can't give you more definitive answers.

[peggysioux]

Qualifying Disposition ESPP Shares

The statement provides the taxable compensation amount of $173, so no not too much. I am confused in that he has no 1099-B (which doesn't mean that he didn't receive) and he tells me that he did nothing with this stock in 2013 but I have a statement from the investment company titled "Total Equity Activity Statement" stating that the shares were disposed in 2013.

[DonB]

Is there anything in the W-2 box 12 that might shed light on this?

[peggysioux]

Qualifying Disposition ESPP Shares

Asked more questions to taxpayer and advised him to go back to the investment company, and guess what......there is a 1099. Taxpayer did not receive the funds (rolled over into new investment) so in his mind, he didn't sell anything. Thanks for the input, very much appreciated!!

Peggy Sioux

[Gary2]

In the For What It's Worth department, while the W-2 instructions don't say anything about employers being required to report the ordinary income part of qualified stock option plans, Pub. 15-B does require it, though it's not qualified with "if known". So I tend to be more concerned about calculating the ordinary income on ISOs and ESPPs when the taxpayer is no longer working for the given company, since there generally won't be a W-2 from the former employer. That doesn't guarantee the ordinary income will be included if they're still working at the same company; it's just more likely (and quite difficult to tell, since there's no required indication on the W-2 for qualified stock plans).