To correct the errors and move on, report your shares acquired from reinvested dividends as regular stock transactions, rather than ESPP shares. When you opt to use your dividends to buy more shares of stock rather than receiving the cash, they are treated as new, separate purchases for tax purposes.
If you initially coded the transactions as ESPP, TurboTax generated an Employer Stock Worksheet in the background. Now, it's requiring ESPP-specific information for a transaction that doesn't have it.
Since you are using TurboTax Desktop, use Forms Mode to look for and delete (Delete Form at bottom left of screen) the Employer Stock Worksheet associated with that reinvested dividend transaction.
Next, open the Captial Asset Sales Worksheet for your brokerage to find the specific row for the reinvested dividend transaction and ensure it is coded as a standard stock sale, or delete just that specific row and re-enter it. This should remove the hidden ESPP worksheet causing the Federal Review errors and allow you to move on with filing your tax return.
The basis for these newly acquired shares is generally the amount of the dividend used to purchase them. The holding period for each new share purchased begins the day after that share was purchased.
However, if you participated in a Dividend Reinvestment Plan and received the stock at a discount, your basis is the fair market value of the stock on the divident payment date. You must also report the discount amount in your income.
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