Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax

What are the long-term vs. short-term considerations when

Customer Question
selling stock from an employee...
What are the long-term vs. short-term considerations when selling stock from an employee stock purchase plan (ESOP)?
Submitted: 1 year ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 21 minutes by:
4/20/2016
Tax Professional: Lev, Tax Advisor replied 1 year ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,130
Experience: Taxes, Immigration, Labor Relations
Verified
ESOPs are qualified retirement plans designed to invest primarily in employer securities.Beneficiaries of ESOP plans are taxed in the year that amounts are distributed or if shares are distributed -the taxable amount is usually based on shares fair market value.In additional - for lump-sum distributions, the amount of distribution is attributable to contributions by the employer.
Ask Your Own Tax Question
Tax Professional: Lev, Tax Advisor replied 1 year ago
But for periodic distributions, the amount won't include net unrealized appreciation that are attributable to employee contributions to the ESOP.Here's an illustration example:http://employee-benefits.lawyers.com/pension-and-profit-sharing-plans/taxes-and-employee-stock-ownership-plans-esops.htmlYou receive an ESOP distribution of 10 shares of Class B stock in your employer's corporation. When you sell the stock and calculate your gain, you'll need to know your basis or cost for the stock. Each share has an average cost of $200. Your contributions totaled $120, and your employer contributed $80 (taxed as ordinary income in the year of distribution). The value of each share is now $300.To figure out the gain on a share of stock, subtract your basis or cost from the value of the share. Your basis is the sum of your and your employer's contributions, and the net unrealized appreciation attributable to your employer's contributions. The net unrealized appreciation on the stock is $100 ($300 current value minus $200). Your employer contributed 40% of the cost of the stock, so 40% or $40 of the net unrealized appreciation counts as part of your basis. This amount is taxable as ordinary income for the year of the distribution. Your basis is $240 - your contribution of $120, $80 from your employer, and $40 of net unrealized appreciation attributable to your employer's contribution.
Ask Your Own Tax Question
Ask Lev Your Own Question
Lev
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,130
30,130 Satisfied Customers
Experience: Taxes, Immigration, Labor Relations

Lev is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,310 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,695 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
A trustee cashed in an ira but didn't distribute funds to
A trustee cashed in an ira but didn't distribute funds to the beneficiaries before the end of the year … read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
717 satisfied customers
I have an IRA account and the beneficiary on the account is
I have an IRA account and the beneficiary on the account is a Trust that I set up. So if I die, the IRA money goes into the Trust. I would like to know how that IRA money is taxed if I die. My total e… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
What does "Distributions Other Than Dividend Distributions"
what does "Distributions Other Than Dividend Distributions" mean on a corporate tax return? Was the amount listed actually giving to the shareholder? … read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
717 satisfied customers
Beneficiary IRA tax question for a CPA. I have a deceased
Beneficiary IRA tax question for a CPA. Hi! I have a deceased client that named her Trust as the IRA beneficiary. The custodian won't send the 4 charities (all charities, no natural persons) directly … read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
Is the sale of customer list a capital gain or ordinary income?
Is the sale of self-created intangibles, such customer lists, digital files, web sites, etc subject to capital gain or ordinary income treatment?… read more
Lev
Lev
Tax Advisor
30,130 satisfied customers
The taxable amount on my Statement of Survivor Annuity Paid is unknown
My mom has a 1099R form that is titled Statement of Survivor Annuity Paid. It is a death benefit from my father who passed away in 1993. The gross distribution is 12156. and the taxable amount is unkn… read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
I have a $66K 410 I want to cash, my taxable amount last
I have a $66K 410 I want to cash, my taxable amount last year was $28K. for instance at $90K what percent tax will I have? I'm 71 years old … read more
abci168
abci168
Principal
27 satisfied customers
I started receiving my pension in February. A QDRO was
I started receiving my pension in February. A QDRO was submitted to split my divorced spouse,however, it was flawed and re written and recently approved. I want to disperse to my spouse her portion of… read more
abci168
abci168
Principal
27 satisfied customers
I have a question regarding the ordinary income tax. If the
Hello, I have a question regarding the ordinary income tax. If the ordinary income tax due is negative does that apply anywhere? This pertains to the sale of an S corp .business. … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
I received a Beneficiary Claim Form from American Equity
I received a Beneficiary Claim Form from American Equity Investment Life Insurance Co. concerning my deceased Mother's policy (IRA). My question is this: should I have federal/state withholding and at… read more
abci168
abci168
Principal
27 satisfied customers
Is 1120-S K1 non-passive ordinary income also taxable to
Is 1120-S K1 non-passive ordinary income also taxable to self-employment tax? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,452 satisfied customers
Related to my previous question are the US beneficiaries of
Good afternoon, related to my previous question are the US beneficiaries of an offshore/ foreign trust obliged to report to the IRS that they are beneficiaries even when the trust had not distributed … read more
abci168
abci168
Principal
27 satisfied customers
If estate is beneficiary of IRA, where deceased was
If estate is beneficiary of IRA, where deceased was receiving RMD, can it be paid out over remaining life expectancy of deceased? … read more
Lev
Lev
Tax Advisor
30,130 satisfied customers
If a beneficiary of an irrevocable trust (the grantor was
If a beneficiary of an irrevocable trust (the grantor was his father, now deceased) has medical expenses paid out of the trust, are they able to deduct those expenses from their personal return?… read more
Lev
Lev
Tax Advisor
30,130 satisfied customers
Robin, I am reading that the beneficiaries of a revocable
Hi Robin,I am reading that the beneficiaries of a revocable trust don't pay taxes on the distributions. Please see below the text I read. So if my mom (a non-resident, foreign person living outside th… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
I am ready to distribute the funds to the beneficiaries as
I am ready to distribute the funds to the beneficiaries as the Executor of my mom's Estate. The Estate has no debts and no earned income (No Interest, No Investments etc..) only the following funds it… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
If I am getting a distribution from a pension and I'm
If I am getting a distribution from a pension and I'm rolling it into an IRA, Can that also be used to lower my tax bill to satisfy the IRA contribution for 2016? … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Is a non-qualified retirement plan taxed at a normal tax?
Is a lump sum from a non-qualified (SERP), assuming no contribution was made by me and therefore no taxes ever paid, taxed at my ordinary income marginal tax rate? If so, can it be spread over future … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x