I sold ESPP stock and got a form 3922 where do I put it on my return?

[joanne0130]

I received both 1099B and 3922 for the sale of these stocks, I added the 1099B to my return but I don't know what to do with form 3922

[TomYoung · Accepted solution]

When you sell stocks that you've acquired via an ESPP, such a sale can create "compensation" income that can be included on your W-2, (or not, depending on the circumstances), and you need to add the compensation to your "out of pocket" cost for the stock.  Your basis is not simply the discounted price that you paid, though this very likely is the basis the broker has reported on the 1099-B.

If the sale of the stocks did create compensation reported on your W-2 and you don't add the appropriate amount to your out of pocket costs when reporting the sale then you're reporting the same income twice; once as compensation income and then again as an overstatement of gain on sale.

If you know the correct amount of basis to use then enter the 1099-B exactly as it reads and then click the blue "I'll enter additional info on my own" button.  On the next page enter the correct basis in the "Corrected cost basis" box. 

But if you are unsure of the correct amount of basis to use for the sale then go back to that sale, ask TurboTax to "Guide me step by step" and tell TurboTax that you're selling stock acquired through an ESPP.  That's where the Form 3922 information gets entered and TurboTax uses that information to calculate the correct amount of basis.

Tom Young

(SINCE THE DEVELOPERS CHANGE THE SECURITY SALE INTERVIEW EVERY SINGLE YEAR I'LL NOTE THAT THIS ANSWER'S DIRECTIONS ON HOW TO CORRECT THE BASIS FOR THE SALE PERTAINS TO THE 2016 INCOME TAX YEAR.  I'M SURE THAT THE INTERVIEW WILL CHANGE IN THE YEARS AFTER THAT.)

[joanne0130]

That helps a lot! Thank you!

[CapB]

To add Form 3922 (Transfer of Stock Acquired Through Employee Stock Purchase Plan...):

1. Sign In or Open TurboTax

2. Click on "Take me to my return" (Online)

3. Select "My account" on top right of screen (Online)

4. Click on "Tools" (Online)

5. Choose "Topic Search" (Online) or "Search Topics" (Desktop)

6. Type "Form 3922" and push "go" to continue through the Form 3922 interview.

If you already filed your return, you will need to amend your return first.

Wait for your return to be accepted or rejected by the IRS.

See FAQ below to Amend 2016 Online:

https://ttlc.intuit.com/replies/5567856

See FAQ below to Amend 2016 in Desktop:

ttps://ttlc.intuit.com/replies/5114143

[joanne0130]

Thank you

[JDummie]

I've gathered form 3922 for reference. But it is unclear how to calculate the 'adjusted cost basis'. There isn't an item on the form that directly calls this out and Turbotax support could not figure it out even after escalation. Any guidance on doing this? 

[hbl3973]

joanne0130,

There is also a TurboTax help document that gives the step-by-step info on the mechanics of what to do:

https://ttlc.intuit.com/community/entering-importing/help/where-do-i-enter-form-3922/00/26375

[411n4m3574k3n]

To calculate the adjusted cost basis using your form 3922, you will use a "Range of Dates" when you got an option to buy the espp stocks.
For example the 3922 will have a range between January 2nd and march 31st between column 1 and column 2. This means that you had the option to buy ESPP stocks during that time, that same row will contain the values of the stock at different times during that range of dates, things like price at grant date or price at exercise date.

If you want to know during which period you made the purchase (hence which row's data to input in turbo tax software to calculate the cost basis for a stock sell) you will have to match the 1099-B "Date of Aquisition" date to the date range of the 3922 form. 

For example if you have a Date of Aquisition in your 1099-B of 04/23/2019, you would use the row with Date option granted = 04/01/2019 and Date option exercised = 06/30/2019 in your 3922 form. This is because April/23/2019 is between April/01/2019 and June/30/2019

NOTE1: The form 3922 might need to be from a previous year and not form current year. This happens when you sell shares that were acquired years ago but sold this year.

NOTE 2: The Adjusted cost basis value in the supplemental information of your 1099-B should already consider these calculations so there is no need for you to do them, they should be accurate.

[JB21964]

TurboTax asks if I purchased my ESSPs at a discount, which I did.  Do i need to enter the 3922 from the year in which i purchased my ESSPs?

[DavidD66]

Yes, you should enter the information reported on Form 3922.  The taxation of gain on the sale of ESPP shares can vary depending on multiple factors.  I recommend you review the information in the following TurobTax Tax Guide:

Employee Stock Purchase Plans

And here is a video on how to enter ESPP sales in TurboTax:

How do I enter Employee Stock Purchase Plan (ESPP) sales in TurboTax?

[mvipat]

The video link is broken. Here's a sample data I've please guide me how to enter it.

Form 1099-B

1a                                 1b (Date acquired)  1c                         1d (Proceeds)   1e (Cost or other basis). 2

Unit sold 7.43188                                          01/10/2024       $2739.68          $2524.24                             Short term

Unit sold 17.3747                                          01/10/2024       $6151.58          $5039.39                             Long term

Other columns are blank or 0 except column 12 that are checked. Also when I select 'Short Term (covered)' it is switching to 'Long Term (covered)' .

Form 3922

1                     2                      3             4             5              6

01 Jul 2024 31 Dec 2024 $336.19 $388.99 $330.64 17.247865

01 Jan 2024 28 Jun 2024 $346.55 $344.24 $292.60 53.133723

01 Jan 2023 30 Jun 2023 $315.86 $310.64 $264.04 57.239399

01 Jul 2023 29 Dec 2023 $310.64 $346.55 $294.57 20.831490

01 Jan 2022 30 Jun 2022 $415.01 $274.27 $233.13 60.239524

01 Jan 2021 30 Jun 2021 $265.62 $318.89 $271.06 46.425524

01 Jul 2021 31 Dec 2021 $321.54 $415.01 $352.76 24.566552

01 Jan 2020 30 Jun 2020 $218.38 $250.51 $212.93 57.857594

01 Jul 2020 31 Dec 2020 $248.15 $265.62 $225.78 39.553099

01 Jan 2019 30 Jun 2019 $171.82 $207.97 $176.77 67.745857

01 Jul 2019 31 Dec 2019 $210.28 $218.38 $185.62 49.962882

Now my question is I sold shares from different years in 2024. Now Turbotax is asking me a single column for number of shares sold so that is 7.43188 but it's a sum for all the shares sold. The column number 6 refers to the shares transferred on 3922 for that year. How should I enter this information in turbotax?

[DavidD66]

I recommend you break down each transaction according to which lot they came from and enter each one as a single transaction.  What you enter will be determined by whether the sale is a Qualifying Disposition or Disqualifying Disposition.  And if a disqualifying whether it is long-term or short-term.   So, if your sale of 7.43188 consisted of stock from the Jan 2020, July 2020, and July 2023 Grants, you would enter three transaction in TurboTax.   

I also recommend that if your company reported the ordinary income portion on your W-2, that you do not use the Company Stock option in TurboTax.  Instead, determine what your cost basis is, if the amount on the 1099-B is not correct, then after you enter the transaction you will be given the option to adjust the cost basis.  When asked if the sale was of company stock, answer No.  

Please see the following TurboTax article for an explanation Qualifying vs Disqualifying and how to determine what you need to enter for each transaction.   

Employee Stock Purchase Plans