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Tracking ESPP Discount as Income?

kcoop
kcoop Member ✭✭
Since it appears Quicken for Mac doesn't have explicit support for ESPP purchases, what's the suggested way to track the income associated with the share price discount?
Quicken user since 1990

Best Answer

  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    edited April 3 Accepted Answer
    This is potentially a very complicated issue. 
    Just to make sure we're on the same page here, there's "Qualified" and "NonQualified" ESPPs.  With a Qualified ESPP compensation (if there is any*) is created at the sale of the stock while with a NonQualified ESPP compensation associated with the discount should be showing up on a W-2 associated with the purchase.  
    Assuming this is a Qualified ESPP, assuming that compensation is created by the sale, and assuming Mac has similar capabilities with RtrnCap  and MiscInc transactions, then one way of dealing with this would be:
    1. At the time of the purchase, record the purchase of the stock in the usual manner, at the discounted price.
    2. At the time of the sale if the discount is going to be recognized as compensation do a RtrnCap action entering the amount as a negative number.  This brings the stock's basis up to the correct amount and puts the Account in a negative cash position.
    3. Enter a MiscInc action in the amount of the discount with the offset being to some sort of "compensation" Category, zeroing out the cash.
    4. Sell the stock, at the correct gain or loss.


    *Compensation should always be created with the sale of the stock if the sale is "Disqualifying" but may or may not be created with a Qualifying disposition.

Answers

  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    edited April 3 Accepted Answer
    This is potentially a very complicated issue. 
    Just to make sure we're on the same page here, there's "Qualified" and "NonQualified" ESPPs.  With a Qualified ESPP compensation (if there is any*) is created at the sale of the stock while with a NonQualified ESPP compensation associated with the discount should be showing up on a W-2 associated with the purchase.  
    Assuming this is a Qualified ESPP, assuming that compensation is created by the sale, and assuming Mac has similar capabilities with RtrnCap  and MiscInc transactions, then one way of dealing with this would be:
    1. At the time of the purchase, record the purchase of the stock in the usual manner, at the discounted price.
    2. At the time of the sale if the discount is going to be recognized as compensation do a RtrnCap action entering the amount as a negative number.  This brings the stock's basis up to the correct amount and puts the Account in a negative cash position.
    3. Enter a MiscInc action in the amount of the discount with the offset being to some sort of "compensation" Category, zeroing out the cash.
    4. Sell the stock, at the correct gain or loss.


    *Compensation should always be created with the sale of the stock if the sale is "Disqualifying" but may or may not be created with a Qualifying disposition.

  • kcoop
    kcoop Member ✭✭
    Ah! RtrnCap (or "Return of Capital" on Mac), that's exactly what i was looking for, thanks!
    Quicken user since 1990
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