ESPP computed income needs to be split between included as wages and not.

[cheezy123]

I sold stock that has been acquired over many years in an Employee Stock Purchase Plan (ESPP).  Some of these shares remained in the account through which they were acquired ("original" account), however, some had been transferred out to another brokerage account ("transfer" account).  The sale of the shares help directly in the original account is reflected in my W2, while the sale from my transfer account is not.  Turbo Tax appears to be grouping all of my ESPP sales into one bucket and is asking me whether or not the computed income is included in my wages.  I can only select Yes or No, and cannot clarify that some of the sales were included and some of the sales were not included.  Is there a way to split this question such that it applies to individual transactions or accounts?  Is there another workaround?

[GeorgeM777]

Yes, you can treat them as two separate transactions.  The sale that is reflected on your W-2, can be entered as one transaction, and the sale of ESPP shares that were transferred out to another firm, and then eventually sold, can be treated as a separate transaction. 

Based on what is happening, it appears that if you treat these transactions as two separate transactions, your return will be consistent with the information on your W-2 because that W-2 only reflects the sale of the ESPP shares that were held in the original account.

We do not know your offer dates, purchase dates or sell dates, so you will need to determine not only your gain or loss, but also what part of these transactions should be reported as compensation income.  The compensation income, which gets taxed as ordinary income, should be on your W-2; however, the compensation income for the ESPP shares that you transferred to another firm, may not be reflected on your W-2.  If it's not there, you still need to include it on your return as compensation income.  

Here is a link to a TurboTax article that addresses ESPPs and taxes.  This article provides examples of purchases/sales of ESPP shares and how to treat them for tax purposes.

Employee Stock Purchase Plans

@cheezy123 

[cheezy123]

That sounds great, and it matches what I what I think is correct as well, however, I don't see how I can do that within TurboTax.  My two transactions are each in different accounts and institutions.  After I review each of the transactions listed under different Institution Names in the investment account summary screen, I hit "Done".  It's not until this point that I reach the "Your Employee Stock Plan Results" screen in which a total "Amount We Computed" (as compensation income) is shown.  I only have the option to select Yes or No to this income being included in my wages.  I don't have the ability to separate this computed income out by transaction or institution.

As a work around, should I redo my transaction that is in my original account and say that it is NOT part of an ESPP?  The compensation income from that transaction is already included in my W2.  Then I would only see the computed income compensation on the "Your Employee Stock Plan Results" screen for the transferred firm and can select "No" to the question of "Is this income included in wages?"

[DavidD66 · Accepted solution]

Yes, that is exactly what you should do.  Since the transaction from your original account already has the income component included in your W-2, you do not need to go through the process of calculating the amount.  For that transaction, do not check the box for "Company Stock".