Investors & landlords

If this is a typical employee stock purchase plan (ESPP) you cannot add the withholding to your basis.

The reason is that they took 1475.56 from your pay and used it to purchase the shares (effectively at a discount because of the free shares). But that 1475.56 is still salary income to you and you have to pay full income and payroll taxes on it.  You would have had to pay those taxes even if you spent the money on something other than the ESPP shares. You did not pay those taxes on the shares or to acquire them, but rather on the income you received and just happened to use to acquire the ESPP shares.

When you sell the shares, the discount you received is ordinary income in the year of sale (FMV @ purchase time - price paid). Any gain above FMV @ purchase is capital gain (with a basis of your cost of the shares plus the discount taxed at ordinary income rates in the year of sale) provided that you meet the somewhat complex holding periods (1 yr from purchase & 2 yrs from grant).  https://www.schwab.com/learn/story/espp-taxes

https://fairmark.com/compensation-stock-options/foundation/withholding/

the income tax withholding will be a credit on your income tax return, reducing your tax due or increasing your refund. You can’t include the withholding in the basis of the stock you received, even though it was an amount you had to pay to the company when you received it.

https://www.thetaxadviser.com/newsletters/2024/stock-based-compensation-tax-forms-and-implications/

ESPPs. ESPPs let employees purchase stock, typically with a 5% to 15% discount, through a payroll election (Sec. 423). This operates like a 401(k). The employee makes an election, and the employer reduces the employee’s net paycheck and purchases stock on the employee’s behalf with the amount taken from the paycheck. Unlike a 401(k), however, the employee’s income reported on Form W-2, Wage and Tax Statement, is not reduced by the amount the employer withholds to purchase the stock.