Hi Tom,
Thanks for the insightful and in-depth information. Below is what I have ended up doing for now but haven't submitted the return yet. I'll wait for your response before I submit.
1) Used the workaround method and entered lot#3 (one with non-reported compensation on w-2) with a slight modification in employer's name to separate it from lot 1 and lot 2. Answered 'No' on last screen for ESPP for lot#3 where it asks if I see the '$xxx` on my W-2 box 1 as income. Once I answered 'NO', the refund numbers in turbo tax DECREASED (as I expected). So, I'm assuming, I'm good here for Lot#3 as I'm paying the due taxes on this lot with this employer name modification workaround.
2) Another thing I encountered was that the total compensation reported on w-2 Box 1 (and also Box 12 a-d with code 'V') didn't EXACTLY match with the w-2 compensation turbo tax software expected for lot# 1and lot#2 combined. There's was a difference of $2.41 reported less on the w-2 form. I did some digging and tracked it down to lot#2 . Anyway, I answered 'YES' on last screen for ESPP for combined lot#1 and lot#3 (same employer name) where it asks if I see the '$xxx` on my W-2 box 1 as income. Once I answered 'YES', the refund numbers in turbo tax remained same (as I expected).
After completing the above ESPP lots, I entered the difference $2.41 under "Miscellaneous Income, 1099-A, 11099-C" interview section following the workaround you mentioned in your original response.
I added it with a description and an amount on the "Any Other Earned Income". It DID NOT affect the refund numbers.
3) Looking again at the consolidated 1099-B / Form 8949, I noticed that Lot 1 and Lot 2 had some additional sale information. It mentioned that "Tax lot closed is a specified lot". This was NOT mentioned against Lot#3. Not sure if that matters but thought of mentioning it.
4) I had reached out to Payroll for clarification about reporting compensation from Lot 1 and Lot 2 on my paychecks and also on w-2 Box 1 but NOT reporting anything for Lot 3. Here's the reply I got from them:-
"...you will see a nominal amount classified as “ESPP Sale” on your pay statement and W2. This is a result of the stock price dropping between the enrollment date and the sale date. When this happened, the company let you purchase at a 10% discount of the sales date price. Therefore, the company provided you with a taxable benefit of a 10% discount. This is the amount that is represented on your W2. Your W2 is correct and you may proceed with your filings..."
fwiw, in the Lot 3 scenario, the price of the stock INCREASED between enrollment date and the sale date
I apologize for this detailed and length question but felt I should be as clear as possible in explaining my situation to get an accurate response.
