ESPP share

[amyonghwee]

I transferred my company's ESPP share from the company stock plan account to my own personal brokerage account. In 2024, I sold these ESPP shares.  My company did not release a W2 form to report the 15% discount given on ESPP shares. How should I report on these ESPP shares sale?

[DavidD66 · Accepted solution]

When you transferred you ESPP shares out of the company stock plan account, they should have issue you a Form 3922 - Transfer of Stock Acquired Through an Employee Stock Purchase Plan. That form contains all the information you need to properly report your sale of ESPP stock.   If you did not receive it, make sure you have all the relevant information or contact your company to obtain the form.  

When you report your enter your Form 1099-B for the sale of the ESPP stock, you will be asked if it was "compnany stock", indicate yes and then indicate it was from an Employee Stock Purchase Plan.  The program will guide you through entering all the information necessary to calculate the gain or loss and the ordinary income component.  If your employer did not report the ordinary income portion, TurboTax will add it to your return.  

For  information on ESPPs, see the following TurboTax article:  Employee Stock Purchase Plans

[Nick_name]

In TurboTax 2024 Premier Desktop, it never asks about ordinary income or gives me the opportunity to say it's "company stock". I've marked the transaction as ESPP, and tried both importing the transaction and entering it manually. Either way, it asks about the adjust cost basis, but not ordinary income.

When I dig into the "Wages, Salaries, & Tips Worksheet", line 5 is where ordinary income from ESPP should go. Clicking on the magnifying glass for that line lets me create a new "Employee stock Transaction Worksheet" for the existing transactions, but the Company Name is set as "Not employer stock" and none of the other information is filled, other than the ESPP checkbox.

I buy Premier specifically so I don't have to do this manually. How do I get TurboTax to actually ask me about my ESPP sales and fill out the appropriate worksheet?

[amyonghwee]

@DavidD66  Thanks for your advice! When I ran the smart check,  on the ESPP sale entry which I did not receive a W2 from my prev employer, the form Summary of Compensation Income From Employee Stock Transactions did capture the correct information, indicating this ESPP sale is not included in W2. But turbotax flagged me to indicate whether this is earned income? I believe I should check YES to Earned Income? Pls advise. Thanks!

[DavidD66]

Yes, you should indicate that the compensation portion is earned income.

[Shirley8]

I have exactly this situation.  I know what portion of the sale is regular income.  However when I indicated that the sale was for employee stock, I was NOT guided through reporting the ordinary income.  Last year, 

Turbo Tax had me fill out the Employee Stock Transaction Worksheet for each sale, which then reported the ordinary income as "other earned income" on my 1040-SR form.  I did not get this worksheet this year.  How do I get this earned income entered?

[DavidD66]

If you imported your form 1099-B, I suggest that you delete it and enter manually.  When prompted to import your tax info, select "Enter a different way".  A couple of screens later on the "Tell us about the sales on your [Broker] 1099-B" page, you will be asked "Do these sales include any employee stock?  Answer "Yes".  When you get to "Now, enter one sale on your [Broker] 1099-B", in the "Sales info" section the first box asks "What type of investment did you sell?"  You need to select "Employee stock purchase plan  (ESPP)",  which is the first choice.   This should trigger the program to ask you the ESPP questions so you can enter the information and report your earned income.
 

[jhbrown42]

I have the same issue as Shirley8.  I'm using Premier desktop.  I imported a 1099-B with one ESPP sale and a LOT of other sales.  In EZStep, I can review that ESPP sale, and indicate that it is ESPP, but then it goes no further.  It does not show, as it did in past years, screens for putting in the offering date, purchase date, discount, etc.  I consider this a new bug.  Yes, if I enter the sale manually, I get the desired flow of screens.  But deleting an imported 1099-B with many sales, and then entering all that data manually, is a really, really poor workaround.  I have even gone into forms mode to try to attach an Employee Stock Transaction Worksheet to that particular imported sale, but I can't figure out how to do it.

I appreciate that you are just trying to help, suggesting deleting the imported 1099-B.  But I'm very disappointed in this year's TurboTax.

[jhbrown42]

You don't have to delete the imported 1099-B and enter all the data manually.  I found a way in Forms Mode to attach the desired worksheets to the ESPP sales.  See my post here: https://ttlc.intuit.com/community/taxes/discussion/re-anyone-having-an-issue-updating1099-b-adjusted...

[amyonghwee]

Sharing this info, if you ever have to enter stock transactions manually, remember you can enter the consolidated amounts accordingly to each section in 1099-B. I did use this approach for some of my 2024 stock transactions.

Below Turbotax article provides more info.

TurboTax Link

Also remember for ESPP, which is different from RSUs, ESPP shares are taxed on the date of sale. It has 2 components.

[1] Discount given when ESPP shares are purchased = Ordinary income. This will appear in your W2. And if it is not on the W2 or you did not receive W2, turbotax has a selection that will ask for this.

[2] Capital gain or loss (sale price - ESPP share price)

Hope above info is helpful.