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Basis of stock purchased through ESOP


Patrick Michael

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First time I have one of these and looking for a sanity check.  Client sold 13 shares, proceeds $7,827.40 in 2023.  Option was granted and exercised in 2018 with a FMV on grant date of 192.98 (box 3 form 3922), FMV on exercise date 207.14 (box 4) and Exercise Price 196.78 (box 5).  From my reading this is a qualified disposition and the basis should be 2,558.14 (13 shares times 196.78 from box 5).

Is my understanding correct?

TIA.

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Going back to 2018, the employer would have been required to add to his W-2:  the difference between FMV and the purchase price.  His basis should therefore be the FMV as of the purchase date in 2018.  This assumes there have been no subsequent activity for those shares between 2018 and the selling date of 2023.

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