topic I have an ESPP where my company pays 15% of the share price to purchase 1 share. What do I put in for the price I paid for the stock? in Get your taxes done using TurboTax

I have an ESPP where my company pays 15% of the share price to purchase 1 share. What do I put in for the price I paid for the stock?

rehrenbard — Thu, 02 Apr 2020 17:38:46 GMT

Technically I am purchasing the stock for the share price, and my company is also purchasing an additional 15% at the share price. So do I just put in the share price? (since I've already noted I had a 15% discount) Or do I put 85% of the share price?

It's confusing because the ESPP statements show me purchasing at the share price and then my company purchasing at the share price. So the price I paid appears to be the stock price, and then I receive some additional stock from company.

I would need to calculate the discounted share price on my own if that is what I am supposed to enter (can I just put 85% of the share price?)

Re: I have an ESPP where my company pays 15% of the share price to purchase 1 share. What do I pu...

AmyC — Thu, 02 Apr 2020 18:13:36 GMT

The big picture, if you own 100 shares, you purchased 85 of them and the company 15. So for that lot of shares, you purchased 85% of the lot which can be broken down to 85% per share.

Remember, the definition of ESPP is that you are buying at a discounted rate - in your case 15%.

I want to urge you to create a financial notebook that is kept separate from your tax return. Keep it safe and each year, add your year-end statements from all your financial accounts plus a copy of your W2’s. This will protect you down the road as proof of your basis in your various investments. As you go through life, rollovers, ESPP sales, and more will be captured for you.

When you sell, you will have different basis prices for different shares.

When you do sell, your notebook will be invaluable with knowing what was first, the order, the basis, and the lot size.

Just a reminder: If you hold your shares for more than a year after the purchase date AND more than two years after the beginning of the offering period then any profit above the gain from the discount will be taxed at capital gains tax rates rather than ordinary rates.

Re: I have an ESPP where my company pays 15% of the share price to purchase 1 share. What do I pu...

rehrenbard — Fri, 03 Apr 2020 18:30:58 GMT

Thank you! That is very helpful.

@AmyC can you answer a short follow up on your answer?

For the price I paid, should I put in 85% of share price, or the amount I paid divided by shares I received? They are slightly different (I believe due to rounding on purchase) based on my account statement. I am planning to go with the actual amount paid since that seems more accurate.

85% of share price is always less than the actual amount I paid when calculating based on shares received versus amount paid. For example,

85% of share price	Actual price paid / shares received
64.28465	65.7318142
65.14825	66.60746004

And then I do need to enter a separate line on my taxes for each date I purchased shares. So if I have done this biweekly for the last 4 years, one line for each date?

Very manual haha!