Sunday, March 21, 2010

Semi-educated tax tidbit: TurboTax and Stocks

Tax season is here again and if you were like me, scouring the internet trying to understand how to fill up that TurboTax form for ESOP and Restricted Stock, then this might be helpful.

(Disclaimer: The information here and even in the links are not Tax advice nor is it any other kind of advice. Don't take my or their word for it. If you see something wrong here, then let me know I'll do my best to correct it. No guarantees whatsoever)

This applies only to Same day sales.

Employee Stock Options:

Net Proceeds = Sale price * num of shares
Date of sale = Sale date

Cost basis = Exercise price * num of shares
Date acquired = Exercise date

Your W2 should already mention the ordinary income earned = Exercise price - Grant price. Sale price can either be higher or lower than Exercise price. That small amount constitutes as Short Term (Same day sale) Capital Gains or Loss.

Restricted Stock:
Net Proceeds = Sale price * num of RS
Date of sale = Sale date

Cost basis = Vest price * num of RS
Date acquired = Vest date

W2 already mentions the income earned on the RS using Vest price on Vesting date.

More info:
- Search for "Understanding Restricted Stock" on Etrade if you have an account.
- NonQualified Stock Options.

Hope this helps.