I have an EPP program at work where I get 15% off my stock purchase . (The Fair Market Value of the stock minus my actual Cost of the stock) . I sold the stock in 2021.
Do I add the 15% discounted amount into the cost basis that was provided on my 1099B? - or
Do I check the box that says "An adjustment is required for a reason not already covered" and then enter the 15% discounted amount on the next page? - or -
If not, where should I enter the 15% discounted amount for the stock sold?
ESPPs can be a hassle to enter but this link has all of the info that you could ever want.
No, it does not. This article assumes that ESPP shares are held by the employer and taxes are not paid on the ordinary income (Compensation Income) until the shares are sold. My former employer reported the "bargain amount" on my W2 in the year the shares were purchased and the shares were transferred to my brokerage account at that time. Hence, the fair market value on the day the shares were purchased is my basis which is comprised of my payroll deductions to participate in the plan and the ordinary income reported on my W2. Several of these lots were sold in 2021. The gains are all long term and I have records to support the basis as described. But I still have a question. When answering the interview question, do I enter $0 for the compensation income for 2021 since the compensation income was for prior years? If no, do I enter the total compensation income for the purchase lot or the amount attributable to the fraction of the purchase lot now being sold?
Because your employer already reported your compensation income, then you can leave the compensation income amount blank. Sometimes taxpayers will dispose of their ESPP shares at a time when they are no longer an employee. In such circumstances, they will need to include their compensation income on their return because their former employer will be unaware of their sale and moreover, because they are a former employee, they will not be getting a W-2.
If you had to report compensation income, and the sale of your ESPP shares was a qualifying sale, then for compensation income, you report the lesser of: