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Returning Member
posted Jun 1, 2019 2:42:42 PM

ESPP Cost Basis Question: What's the difference between the "Acquisition Fair Market Value" and the "Subscription Fair Market Value"? I'm trying to find my cost basis.

Could I simply take the discounted rate that I paid for the stock and add 15% to it to find the Cost Basis?  Thanks!

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1 Best answer
Level 13
Jun 1, 2019 2:42:46 PM

"So I guess my question is changing a bit...since I was never taxed on the 15% discount because I was retired when I sold these, should I just use the price I paid for the shares - which would be the 15% discounted price?"

This can't be answered "Yes" or "No" because for qualified sales compensation is calculated as the lesser of two numbers:

The first is the discount allowed on your purchase, determined as of the "grant date," which is normally the first day of the offering period. Note that this is not necessarily the actual discount you received on the shares. It's the discount determined as if you bought the shares on the grant date, even though you didn't buy the shares that day and couldn't have done so even if you wanted.

The second number, which comes into play only if smaller than the first one, is essentially your profit from the shares. More precisely, it's the difference between the fair market value of the stock when you disposed of it and the actual amount you paid for the shares.

You can use the ESPP interview to report the sales, referring to your Form 3922 information.  TurboTax will calculate the compensation and add that amount to your out of pocket cost.  When you're done entering trades work through to the bitter end of the "Stocks, Mutual Funds, Bonds, Other" interview.  You'll eventually come to a page titled "Your Employee Stock Plan Results" where TurboTax will ask if the compensation has been reported on a W-2.

Tom Young

4 Replies
Level 13
Jun 1, 2019 2:42:43 PM

Offhand I can't think of anyplace in TurboTax that asks for "Subscription Fair Market Value", so where are you seeing that?

Was your employer's ESPP a "Qualified" ESPP allowing for a discounted purchase price?  Is 15% the correct discount for this plan?  Are your sales Qualifying on NonQualifying?  What's being reported on your W-2, if anything is, due to these sales?

Returning Member
Jun 1, 2019 2:42:44 PM

These are qualified sales.  I've since found some additional information. e.g. the Form 3922 and a similar older version of that form.  Yes, the plan was at a 15% discount.  I'm no longer with the company and have cashed in some shares in Retirement, so there are no w-2's.  

So I guess my question is changing a bit...since I was never taxed on the 15% discount because I was retired when I sold these, should I just use the price I paid for the shares - which would be the 15% discounted price?

Level 13
Jun 1, 2019 2:42:46 PM

"So I guess my question is changing a bit...since I was never taxed on the 15% discount because I was retired when I sold these, should I just use the price I paid for the shares - which would be the 15% discounted price?"

This can't be answered "Yes" or "No" because for qualified sales compensation is calculated as the lesser of two numbers:

The first is the discount allowed on your purchase, determined as of the "grant date," which is normally the first day of the offering period. Note that this is not necessarily the actual discount you received on the shares. It's the discount determined as if you bought the shares on the grant date, even though you didn't buy the shares that day and couldn't have done so even if you wanted.

The second number, which comes into play only if smaller than the first one, is essentially your profit from the shares. More precisely, it's the difference between the fair market value of the stock when you disposed of it and the actual amount you paid for the shares.

You can use the ESPP interview to report the sales, referring to your Form 3922 information.  TurboTax will calculate the compensation and add that amount to your out of pocket cost.  When you're done entering trades work through to the bitter end of the "Stocks, Mutual Funds, Bonds, Other" interview.  You'll eventually come to a page titled "Your Employee Stock Plan Results" where TurboTax will ask if the compensation has been reported on a W-2.

Tom Young

New Member
Feb 16, 2023 6:51:35 PM

ON CHARLES SCHWAB   STAEMENT FOR MY ESPP 3 COLUMNS 1)PURCHASE PRICE  2) Acquisition FMV 3) Subscription FMV . Which one is grant price which one is discount price?