Posted: 1/28/2007 5:42:41 AM EDT
|
I started doing my taxes yesterday and, for the first time, I ran into a snag. In the second half of last year, I signed up for my company's ESPP. Luckily, my company was purchased, so I made out like a bandit: Plan purchase price: 101 shares @ $30.33 Discount rate: 15% Cost basis: $2604 So, when the merger was completed in January, those 101 shares were converted to cash at $44 a share  Here is where it gets interesting. The ESPP broker sent me a check a few days after the close for $3200 meaning that they withheld taxes on the entire $4444 ($44 x 101 shares). Now, I understand that I need to treat the 15% discount (~ $500) as regular income on my W2 and I understand know how to handle the actual stock transaction on my Schedule D. However, how the hell do I recover the withholding? I should only be paying capital gains on the profit of the sale, not the entire proceeds of the sale. Any tax pros out there that can point me to an IRS doc? |
|
The withholding will either show up in your W-2 or in a 1099-B that should be provided to you by your broker. In any event, the amount of federal income tax withheld on the stock sale should be added to your other federal income tax withholdings and shown on Line 64 of your 1040. Just make sure you don't count it twice. Good luck mate. |
I'm still waiting for this, but it'll show up on line 4 of my 1099-B. Luckily, I figured out that this is called "Backup Withholding" and was able to find the line-item in TaxCut. Thanks for the help! 
|