Some more information that I have uncovered since my original posting.
I checked my Payslips. In the last payslip for the year, the total yearly salary components are itemized such as regular salary, vacation pay, etc. There are two items "Sale of ESSP" and "Sale of ESSPDQ". When I add up the amounts for these two items, it equals the income reported for all the ESPP sales by the broker in the "Supplemental Tax Information" form. These two items are also reported in Box 14 of the W2 as ESPD and ESPQ respectively and the sum of the two figures there also equals the income for all the ESSP sales in the Supplemental Tax Information form. This means the employer is reporting the ESPP sales in my W2 and it is already included in Wages (line1 of the 1040).
Now let us look at the correct way to handle this in the "Capital assets sales worksheet" for TurboTax.
I believe the correct number to enter for the "Adjusted Cost Basis" is the same as "Proceeds" - in this example it is $7,559.96 since we want the "Adjusted Gain" to be $0, and we will avoid double taxation.
I talked to TurboTax support last week, but I did not have this Payslip information at that time. I hope to get confirmation from them that this is the correct approach. If any of you folks on this forum have taken a similar approach, please let me know. Thanks!
