How to report ordinary income of ESPP shares held ...
Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
attanon14
Returning Member

How to report ordinary income of ESPP shares held by decedent

How and where do you report the 15% discount on ESPP shares held by a decedent when it is not included in their final W-2?  The shares were not sold but the death triggered a qualifying disposition, and the 15% discount is supposed to be included in box 1 of their final W-2 as compensation income, reportable on their final return.  I have tried the suggestions in the below thread but these all assume the shares were sold and that proceeds and cost basis need to be entered.

 

https://ttlc.intuit.com/community/taxes/discussion/where-is-the-question-on-whether-espp-ordinary-in...

2 Replies
AmyC
Employee Tax Expert

How to report ordinary income of ESPP shares held by decedent

If the decedent did not sell the stock and did not realize the income, it would not be included.

 

If the stock was sold after death, it is part of the estate and cost basis is value on date of death.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
attanon14
Returning Member

How to report ordinary income of ESPP shares held by decedent

Hello Amy

Thank you very much for your quick reply. Could you point me to a source? There isn't a lot of information out there on this situation.  I found a note on an employer website (which I can't find anymore, and here (last sentence) http://www.stockoptionadvisors.com/stock/eso-faq/esppdiscount/

 

Although I understand the capital gain being eliminated with the stepped up basis upon death, I wouldn't be surprised if the 15% discount is still due since it is considered compensation, in which case it would make more sense that it should be included on the final W-2 rather than expecting parties to know the discount when the shares are disposed of by beneficiaries.

 

It it turns out there is compensation income (whether triggered by death or disposition by the beneficiaries), how do I enter the compensation income in Turbotax when it is not included in a W-2? 

 

Again, thank you very much.

Dynamic AdsDynamic Ads
v
Privacy Settings