If there were a shitload of time, I’d spew tales of my first-days-of-firsthomeowners-shit, like how the first load of laundry spewed shit up through a drain-to-hell in the basement, if “shit” were in actuality “sewage” or “water and golfballs and debris and flotasm” and some shit, I’da know, but I saw it…and my first plumber/root-cleaning-expense. F-U icky-water portal to hell.
But I did CRUSH FOR SIZE!! And when I say “size”, I mean “don’t start lookin’ at my zipper.”
I bought stock from a company from whom I was working for, through a payroll-deduction ESPP, at a 15% discount, and shit. Like 247@$8.82 and 554@$5.31. I dumped when it hit $11.46 a week ago. Initial investment like $5106.00 pre-tax shit and I guess now I have an account on Etrade for $9165.
Somebody needs to explain to me, like I was a* spacebrain-growin’-Northern-Lights-under-CFL’s-in-a-hidden-area-of-the-stairwell*, that the first deduction of $5106 gets taxed as income, but the resulting fortune, the “Grapes-of-Cash” MelProfit, gets filed under another form, and by “form” I mean stop looking at my junk.
What amounts go on what forms?
Word.
And what is sound late at night, shit this place freaks me out sometimes
The $5106 initial investment is already reported along with your wages on your W-2 (ESPPs are after-tax; it’s your 401k that’s pre-tax), so the only place this specific amount will be on Schedule D (or whatever form you’re supposed to put your Cost Basis on) as your Cost Basis. The full $9165 in proceeds from the sale is reported as income, and the $4059 difference becomes your Capital Gains income. If you held the stock for less than a year, it’s Short Term Capital Gains, and more than a year is Long Term Capital Gains, the latter being taxed at a lower rate. And shit.
It also matters whether this is a Qualified Plan or an ISONS (incentive stock option n shit) plan, as to when the gain is taxed. In some situations a gain is taxable when the option is exercised (the amount the market value exceeds the strike price), in other cases it’s not taxable until you sell the shit. My guess is the latter, as most ISOs are geared towards executives, IIRCNS.
Don’t worry about it. The IRS knows everything. They will contact you with what you should pay, if they don’t deduct it directly out of your paycheck or bank account.
Wait, if the $5106 initial investment is after tax (and therefore already declared as income at the time), then why is the full $9165 in proceeds income? Shouldn’t income only be the $4095 difference?
Oh, and shit.
With grammar like this, I believe the usual tactic is to ignore the gains, claim your sister’s kid as a dependent for the EIC credit, pay extra for the rapid refund, and pretend like the IRS won’t ever figure it all out.
As a tax preparer, I’d start by getting documentation from the employer or the broker used by the employer for the sale. Most of the time, a sale from a stock option is reported in W-2 earnings, less a commission. Thus, there’s actually a capital loss on Sch D for the amount of the sales commission. The documentation will itemize these expenses and also provide some explanation regarding when/how the stock was acquired/vested, the type of plan it was under, etc. It’s the only way to be sure it gets done right.
