Trying to see how to report correct cost basis on VMware ESPP after merger. I can’t find any 3922 statements. Trying to see if I missed downloading them earlier and now we don’t have access to them anymore. I do see supplement document and adjusted cost basis on it but 3922 would have been accurate and want to verify numbers against 3922. TC- 270k
On ESPPs there is usually a standard discount like 15%. Assuming your sales are qualifying dispositions and your supplemental document has original and adjusted, you should see a consistent % spread between the two. If you’re lacking that information you could always apply a 15% ordinary income hit on a 8949 adjustment code in the appropriate column. There’s really not to my knowledge a great mechanism for catching ESPP sale mistakes at the IRS I’ve seen plenty of people screw it up and win the tax audit lottery.
I do have qualified ESPP and sold them prior to the acquisition was closed. Do I report the adjustment as ordinary income for 2023? I assumed it only gets reported on W2 by employer in the year that the shares are sold. That means VMware never reported them on our w2 in the past? Thanks! Disclaimer: no longer work at VMware/brcm.
They weren’t reported on W2 in past because the taxable event is the sale. The ordinary income portion presumably would’ve been reported on your w-2 box 1 income. That part should be fine as printed and reported. What you need to do is raise the cost basis on the 8949. You report the original and with a 8949 code, you raise the cost basis to adjusted to reflect the taxes paid already on ordinary income hit of the stock sold. So essentially the 15% discount gets taxed at ordinary rates on W-2, you get a basis increase on stock cost basis so you aren’t double taxed at your 15% or 20% capital gains.
I no longer work at VMware and left VMware years ago. I haven’t seen any W2 from them so far. E*trade did generate supplemental form and reported cost basis on it. But that means I will have to calculate ordinary income and not sure how they adjusted cost basis. Usually 3922 form helps but can’t seem to find it. Not sure where is it… On top of it, VMWARE also gave dividend couple of years back and some portion of it was return of capital. Not sure if that is also adjusted in supplemental form.
This is very common not because they’re not supposed to - but they forget to a W-2 to terminated employees with legacy exercised ESPP. Yea academically and correctly you have to add back ordinary income usually other income in Schedule 1 is fine and then adjust basis of stock sold on 8949. 3922 would help you identify the discount ordinary income hit if a supplemental form is unavailable from the brokerage. Unofficially, I have seen many people have ESPPs sold or transferred out to another brokerage and sold and the status as ESPP is lost in the IRS winds and they never get called out on it. ESPPs also make great candidates for tax efficient stock donations if the benefit is worth it to do because you avoid ordinary income hit. ESPPSs also make great buy and hold forever because on inheritance their status as ESPPs get lost and your beneficiary gets the FMV value basis step up anyway.
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I can't do this because the account doesn't exist anymore.
How so? I still have mine. Possibly because I had opened a personal brokerage account?)