Donated (not sold) ESPP, How do I report amount taxed for Ordinary Income?

[rrmills7777]

I donated a significant amount of qualified ESPP shares from a former employer to charity this year.  I know that I can deduct FMV, but need to pay income on the discount I received at purchase.  I'm assuming I will not receive a W-2 with this income from my former employer.  I've seen conflicting information on how best to do this in TurboTax.

Since I donated (not sold) it, I did not receive a 1099-B, so there is no transaction that might get me something on Schedule 1, line 8k.  I've seen advice in turbotax to get it both to Schedule 1, line 8z and to 1040, line 1h.  What is the correct thing to do here?

[ThomasM125]

The discount is wage income not subject to social security or Medicate tax. You can enter it in TurboTax as follows:

1. Go to the Wages and Income section of TurboTax

2. Choose Less Common Income then Miscellaneous Income, 1099-A and 1099-C

3. Choose Other Income not already reported on a Form W-2 or Form 1099

4. Indicate that you had Other Wages Received

5. On the screen that says Any Other Earned Income? say yes

6. Indicate that the source of income was employee compensation not reported on a W-2

7. Report the wage income and use reason code H 

[jackf1958]

I followed the steps above, and TT entered the ESPP income amount on Form 8919 and added SS and Medicare taxes, which seems incorrect.   I think the answer in step 6 above should be "Other" for the Source of Income.    Then,  you should enter a description and an amount on the "Any Other Earned Income" page, and no SS/Medicare taxes will be added.    Agree?

[MarilynG1]

If the amount of your ESPP discount had been added to your W-2, it would have been subject to SS and Medicare tax, so this is correct. 

Here's more info on Form 8919. 

@jackf1958 

[jackf1958]

Sorry, I forgot to include the basis for my statement that ESPP income is not subject to SS/Medicare taxes.  Here it is, from IRS Pub. 15-B, p. 12.      https://www.irs.gov/pub/irs-pdf/p15b.pdf

Wages for social security, Medicare, and FUTA taxes
don't include remuneration resulting from the exercise of
an incentive stock option or an employee stock purchase
plan option, or from any disposition of stock acquired by
exercising such an option.

Agree or disagree?