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We donated Shares of Employee Stock Purchase Plan Stock to charities, but we received a Form 3922 which implies that we sold this stock and received income. What do I do?

 
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We donated Shares of Employee Stock Purchase Plan Stock to charities, but we received a Form 3922 which implies that we sold this stock and received income. What do I do?

A Form 3922 does not imply that you sold them.  It reports that the stock was transferred to you.  If you had asked that the stock be placed in your brokerage account, and you sold none of the shares, you should have received a From 3922.

The transfer of the stock to charity almost certainly creates compensation income that you need to report, or has already been reported on your W-2, and it adds to your out of pocket discounted purchase price basis, which could affect the amount of your charitable deduction if the stock was held short term.

TurboTax has no easy mechanism for reporting the compensation on Form 1040 if it hasn't been already reported on a W-2.  Probably the best way is to report it as a form of "Other income" on line 21.  If the transfer of the stock resulted in a disqualifying disposition the discount on the purchase of the stock is considered compensation.

Tom Young

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