Because ESPP shares are purchased at a discount, there are special tax implications. When you sell, you may be liable for income tax on the amount of your discount, as well as for capital gains tax on the security's appreciation. The amount of each tax that you're liable for depends on how long you've held the security. Quicken tracks the holding period for you and handles the tax implications for both income tax and capital gains.
Use the Capital Gains Estimator to reduce your potential tax liability.
- Open the account you want to use.
- Click Enter Transactions.
- In the Enter Transaction list, select Sold ESPP Shares.
- Choose the security for which you're selling or removing shares.
- Click Launch Wizard.
- If you need additional information as you're completing the Sold/Removed ESPP shares wizard.
- Do you want to record the proceeds of this transaction in a Quicken account?
Choose how you want to record cash proceeds of the
Sell transaction.
| Select | If | How Quicken handles the cash | How Quicken handles the sale |
|---|
| Yes, add to my cash balance in this account | Money from the sale goes into the current investment account | Increases the cash balance of the current account | Enters this transaction in the transaction list as a Sell |
| Yes, add to another Quicken account | Money from the sale goes into another account | Increases the cash balance of the other account | Enters this transaction in the transaction list as a SellX |
| No, withdraw the shares without affecting any cash balance | You are simply withdrawing the shares from the current investment account | This method does not affect the cash balance of any account | Enters this transaction in the transaction list as a ShrsOut (shares out) |
- Sell/remove shares
| If you previously selected | You now enter | Notes |
|---|
| Yes, add to my cash balance in this account or Yes, add to another Quicken account | Enter the number of shares you sold, the sale price, and sale date. Enter any commissions or other fees separately, in the Commission/Fee field. |
|
| No, withdraw the shares without affecting any cash balance | Enter the number of shares you're removing and the removal date | Quicken reduces the number of shares in your account and records a sale with a capital gain of zero. |
Select whether you want to track the sale using the lot ID of the security or the average cost basis of the security by clicking the corresponding option (Average Cost or Lot Identification).
- If you want to track the sale using the lot ID, have bought shares of this security more than once, and now want to sell only a portion of your accumulated shares, click Specify Lots. Otherwise Quicken chooses to sell the oldest shares (called First In, First Out, or FIFO).
- Don't select Average Cost without first understanding the tax implications.
If this is your spouse's ESPP plan, click to select the Spouse's ESPP check box. This helps Quicken assign the correct tax dialog line item to the proceeds.
- Summary
This screen summarizes all the information you've entered in the previous three screens. Feel free to change any editable information on this screen, and then click Done. Quicken enters this transaction in your investment account transaction list.
Quicken enters both a Sell transaction and a MiscInc transaction in your investment transaction list. The MiscInc transaction uses a category of _ESPP Self Income or _ESPP Spouse Income for the amount that should be taxed as ordinary income. The Sell transaction is used to calculate the amount that should be taxed as capital gains. Quicken reports the tax implications for both income tax and capital gains.
Notes
Recording a transaction in Quicken does not execute a real-world trade, transfer, or other transaction. Contact your broker to execute trades or transfers, and then manually record the transactions in Quicken—better yet, download them directly from your participating financial institution.
