Discussion:ESPP Ordinary income calculation

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Revision as of 22:09, 12 December 2007

Discussion Forum Index --> Basic Tax Questions --> ESPP Ordinary income calculation
Discussion Forum Index --> Tax Questions --> ESPP Ordinary income calculation

Inagpurwala (talk|edits) said:

12 December 2007
I understand that if ESPP shares are sold under two years of holding period, then 15% discount is treated as Ordinary Income for tax purpose.

I am working on 1040X – 2005 for a client and it seems that for one block of shares, ProSeries (ESPP Worksheet) is not calculating Ordinary income amount correctly. Here is info details:

1st Block trade: Offer date 03/03/03 Mkt Price at Offer date $20.44 Purchase date 08/31/04 Mkt price at purchase date $15.96 Purchased price $13.56 Commission on sale $20. Number of share sold 342 Date sold 11/18/05

Calculated (ProSeries) Ordinary income $1049 = 342 X 3.06 This calculation is correct.

2nd Block trade:

Offer date 03/03/03 Mkt Price at Offer date $20.44 Purchase date 02/27/04 Mkt price at purchase date $29.62 Purchased price $17.37 Commission on sale $14. Number of share sold 332 Date sold 09/01/05

Calculated (ProSeries) Ordinary income $473. Per my calculation it should be $1018 = 332 X 3.06

Question: Where I am making error? Thanks in advance

IshaqInagpurwala 16:09, 12 December 2007 (CST)

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