Why is turbotax not taxing income from ESPP held over 1 year with long term capital gains?

[rjko364118]

I filed an 83b with the IRS years ago for company shares I received. The company sold last year and I got money directly into my bank, no tax forms, nothing. When I enter the income it looks like it's taxed at the ordinary income tax rate. Help?

[hbl3973]

rjko365118,

While I've only used 83(b) once and not for ESPP, perhaps you may be overcomplicating this.  You know what you paid for the stock.  Add to that ordinary income, if any, that may have been added back then to get your basis.  Manually enter a single 1099-B entry with acquisition date VARIOUS, toggle to set long term, basis not reported to the IRS, sales date whatever date was on your proceeds check or date of direct deposit, and the net proceeds you received.

Fundamentally, while TurboTax Premier tries to make life easier when dealing with ESPP, ISO, NQSO, etc., if you already know your cost basis, proceeds, and holding period, it can be less confusing and possibly quicker to just manually enter a simple transaction.  The biggest caveat for the case where a 1099 was issued with basis reported to the IRS is to remember to record exactly what is on the 1099 and then make a separate adjustment to account for the difference between your actual basis and what is shown on the 1099.