How to calculate profit for ESPP stocks including cost basis, tax, fees etc
I opted for ESPP stock options in my previous company. The plan offered 10% discount on market value. When I opted for the plan the company created a etrade.com account on my behalf and I could see stocks credited quarterly for deductions made through my paycheck.
Question is on this particular transaction
Date Acquired: 03/31/2018
Capital Gains: Long-Term
Type: ESPP
Purchase Price: .86
Purchase Quantity: 68
Discount Percent: 10%
Grant Date FMV: .95
Expected Disposition Type: Disqualifying Disposition
Current market price of the stock is .81
How should I calculate my profit?
Etrade also shows
Purchase Date FMV: .50 Est
Cost Basis(per share): .50
Net Gain/Loss: -.69
How did they arrive at net loss though the price has increased and it is a long term capital gain?
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It looks like your ESPP has a lookback provision, where you get 10% off the lower of the FMV on the grant date (i.e. start of offering period) or the purchase date (i.e. end of the offering period). In this case the price rose over the offering period, so you get 10% off the grant date FMV. Since this is a disqualifying disposition, your entire discount (.64/share) should be reported on your W-2. The stock has since dropped since the purchase date, when your cost basis is established, hence the capital loss. Assuming you sold today it would be a long-term capital loss. It looks like your brokerage is reporting this correctly but make sure the discount is only taxed once; in some cases you are required to manually increase your basis to reflect the discount reported on your W-2.
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