Stock Vesting

About half of my income right now comes in the form of stock that is vesting. This is resulting in high tax bills which must be paid in cash. To do so, I have to sell stock to cover the tax bill. What is the best way to enter this in the system? How would I enter the following scenario (fictitious numbers):

Sell 50,000 of existing stock (that is taxed as capital gains) to pay tax bill (from 2016).
Receive 100,000 of vesting stock that is taxed as ordinary income


dan royer's picture

Well, this is in regular assets, so if I understand this correctly, it seems you'd just enter a $50K special expenditure (it doesn't matter what it is going to pay for) but you need to reduce the balance in your regular assets by $50K. If you are receiving 100K you need a special receipt of $100K.

If you are trying to account for a taxable event only you can create a taxable receipt at the cap gains rate, and then offset it with a non-tax deductible expense so that the net of the transaction is just the cap gains tax.

One more scenario:

Sell 50,000 of existing stock to make estimated tax payments for 2017


dan royer's picture

Yes, I believe that situation is just a special expenditure of $50K. Special expenditures can be not tax deductible or tax deductible at one of the three rates (medical, exclude from AGI, or ordinary tax deductible). Normally ESPlanner is calculating and accounting for tax payments on income and taxable special receipts, aware as it is of rates for federal and state. I have sometimes made quarterly payments for taxes, but I don't account for them as special expenditures because the tax I am paying is for, say, self-employment income which is already entered in the program and thus ESPlanner is causing me to pay tax on that without me having to use special receipts.

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