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Max W

GENENTECH STOCK OPTIONS

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Client is employed by Genentech receives SSAR's and RSU's from Roche, he parent company.  Neither type become taxable until sold.  The sales are reflected in Box 1, W-@, and the breakdown is shown in Box 14.   Roche uses Equatex as a broker.  The client sold $85K of his holdings last year.   To report on Sch D, the basis should be the amount added to box 1, W-2.   I am coming up about $5000 short and I don't think there should be any CG on this amount.

I am wondering if the difference is in commissions, but looking at the Equatex Europe stmt, they are about 0.25%, so they don't come close.  Equatex USA only shows the total sale price and nothing else.

Any ideas?

 

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It sounds like the differences may be from a change in share price between when they were added to the W-2 as compensation and the share prices when sold.

 

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4 minutes ago, Max W said:

They couldn't be added until the stock was sold.  

Yes, I saw that in your original post.  The way I understand each of these, the addition to compensation is at the exercise date/price for the SARs and at vesting/market value for the RSUs, but that the sale doesn't have to necessarily be simultaneous and employee can continue to hold and sell at a later date.

Is my thinking all wrong on this, or is there a specific requirement in this employer's plan that requires the immediate sale?

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Judy, that is also my understanding.  There may be a requirement in the plan, or it may have been the only way to "buy" shares with a sell-to-cover and what was told to Max was not quite the right situation.  These transactions usually end up with a small capital loss due to transaction fees, but I agree that $5K sounds like something is off somewhere.  

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Agree.  It sounds like the gain occurred between the time of the established basis when consummated on the W-2, and the time these things were ultimately sold.  And it should be a LTCG if the lapse was longer than one year.

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Sorry, Max, I tried to post more about the situation but the system here said too much time had lapsed and disallowed my edit.  I had begun my edit when the clock struck 12.  Should not lapse in the middle of posting a narrative. 

Fact of the matter, I may not necessarily agree with Judy and Catherine if the company did not add to the W-2 until the sale.

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SAR's and RSU's are essentially the same, except there is a limit on the number of RSU's that can be sold in a given year.

Both are awarded as grants to the employee who must wait until they are vested before selling them.  The employee has no basis in either one.

If the stock has appreciated at the the time of sale,  that appreciated amount is accounted as ordinary income and goes to box 1, W-2.  If there is any change in the value of the stock after it is cashed out , I don't see how it could affect anything.  

 

 

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One long shot possibility is that some some of the sales were short term and there was no need to add them to the W-2.  That could be the case if there were short term and long term vesting periods.

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Do you have the paperwork he received when the transaction actually occurred, in addition to the year-end documents?  I always go through those statements, which hopefully will allow you to tie the number of shares executed/price to the W2 amount and the 1099-B.  Best I got.

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The client sent two Sale Confirmation letters, but there should be ten  letters as 10 transactions took place on the same day

What is puzzling is that one letter has  $4950.16 ,RSU's, and shows up on the Combined 1099B Form, and the $3823.45 stock, does not.
The RSU's on the W-2 were $3307, so that doesn't match the $4950.
 
What is intriguing is that the $4950 is close to the $5108 "missing" amount. 
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Get his end of year pay stub too, may have items that were added to the W2 but not reported in box 14. 

I had a client with these (Rusch) RSUs & SSARs. Hopefully your client saved all of the statements. They were truly confusing, but then again my guy was retiring and had no idea his vested options were worth what they were. Always missed a few zeroes when looking at the statements. 

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Thanks for the suggestion, Joan.  He sent his final 2017 pay stub and have it attached here.  I can't see that it helps, but maybe someone else can.

I don't understand the SSAR and RSU tax being under non-cash earnings and included in the total.

 

Edited by jklcpa
deleted pdf containing confidential information

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1 hour ago, Max W said:

Thanks for the suggestion, Joan.  He sent his final 2017 pay stub and have it attached here.  I can't see that it helps, but maybe someone else can.

I don't understand the SSAR and RSU tax being under non-cash earnings and included in the total.

 

@Max W I deleted the paystub because it contained the client's name and employee number at the top of the 2nd page.

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I have reattached the 2017 final pay stub without personal info.

 I can't see that it helps, but maybe someone else can.

I don't understand the SSAR and RSU tax being under non-cash earnings and included in the total.

P.S. Thanks Judy for your eagle eye.

 

2017 Final Pay stub rev.pdf

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Hi Max,

I hope you have solved the discrepancies.  I have a new client who also works for Genentech and receives RSU and SSAR from Roche in his W-2 box 14.  I  cannot reconcile his W-2 with his Equatex statements.  Did you ask your client to provide you with any additional statements?  I am trying to determine his cost bases.  Please shed some light on how you reconciled the RSU and SSAR with the Form 1099-B.  Thanks in advance for your help.

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Yes, Belinda, the client was able to get a spreadsheet from the the department that handles investments.  It had all the necessary information.  I don't recall if it was HR or some other department.

 

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Thanks, Max, for your reply.  

I got a YE statement from Equatex, but they do not tie in with the Form 1099-B nor W-2 box 14.  Could you please tell me what kind of spreadsheet that your client gave you?  I will ask my client for the same spreadsheet.  Thank you.

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