Hello all, I had a tiny amount of company shares that vested each quarter last year and then approx half of those shares were sold by the company to take care of taxes.
This was done automatically when the shares vested. The value of the vested shares was added to my W-2 and the taxes withheld were also reported in my W-2.
My question: Do I need to report anything in my taxes when I file? And if so, where? Do I need to worry about same day sales??
I'm using turbotax for my filing.
Thank you!!
Yes, you have to report the shares sold on Schedule D short term gains. But note that you won't be paying tax twice as the cost basis on Schedule D will be increased by your W2 income (just for the shares sold).
But I'm not that the vesting of shares is a taxable event. Only the exercise of shares is taxable. Also, ESPP is taxable. Did your vested shares have a strike price?
Say you got 1000 shares with a strike price of $10 and market price was $110 on the day you exercised and sold the shares, with $100,000 added to your W2 income. And you (or the company on your behalf) sold
500 shares. On Schedule D, you would report 500 XYZ, cost basis 10*500 = 5,000, proceeds = 110*500 = 55,000, net gain = 50,000. Sounds bad so far, as you're paying double tax on 50k of shares -- once through W2, once through Schedule D. But now, increase the cost basis by the W2 income of 50k, so cost basis = 55,000. You have to do this, otherwise the IRS will likely send you a letter saying that you didn't report 50k of stock proceeds and they will say you owe taxes on 50k (but don't worry as you can just give them an amended return). But there's more. There were likely commissions when you exercised, so add these to the cost basis or subtract them from the proceeds. If the brokerage company reported proceeds of 50k to the IRS on 1099-B, then add the commissions to the cost basis. So you'll end up with a net short term loss of say $20, assuming the commissions were $20. And remember to add the 50k to the remaining 500 shares when you sell it in a future year.This has nothing to do with Turbotax.
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