How do I track employee stock purchase plan (ESPP) shares manually (for accounts from previous Quicken versions)?

Use these procedures only if you've been tracking ESPP shares manually in previous Quicken versions.

Unless you've already added an account to track ESPP shares manually and aren't ready to upgrade, it is simpler and more accurate to use the Enter Transaction dialogs to add and track ESPP shares.

If you're recording ESPP transactions into a Quicken account that you've activated for online account services, keep in mind that your broker may track the discounted purchase price and its tax implications using different transaction types. It is preferable not to download ESPP transactions into Quicken.

Before purchase

Add a separate investment account to track your ESPP stock shares.
Enter your paycheck as a register transaction, with deductions.
As you enter each paycheck into the register, transfer the amount of your ESPP contribution to your ESPP investment account.

At the time of purchase

Enter the buy for your securities at the discounted price in the investment transaction list. Make a note of the actual market price at the time of purchase in the Memo field.

When you enter a buy transaction in Quicken, the purchase price is recorded in the security's price history. Because you purchase ESPP shares at below market price, the price history for this security will thus display an artificially low value for the date of purchase. If you want your price history to reflect the actual market value, be sure to download prices or edit the security's price history to reflect the actual market price on the purchase date.

If you sell the shares within one year after the purchase date or within two years from the beginning of the applicable offering period

If you sell the stock within one year after the purchase date or within two years after the Offering Date, part of your gain is taxed as ordinary income. This amount is the market value of the stock on the purchase date, minus your purchase price. Capital gain is calculated as the sale price minus the amount that is ordinary income, minus the purchase price. Capital gain is long-term if the stock is held for longer than one year.

This procedure will record your taxable income twice: once as a MiscIncX salary transaction and once as the difference between the market value of your stock when you sell it and the discount at which you purchased it. To avoid this, use the Enter Transaction dialogs to add and track ESPP shares.

In the investment account transaction list, enter a MiscIncX action, with a Category of Salary, for the difference between the market value of your stock when you sell it and the discount at which you purchased it.
For example, if the market price of your stock when you decide to sell is $1000.00, but you purchased it for only $850.00, enter a MiscIncX transaction for $150.00.
In the investment transaction list, click Enter Transaction.
In the Enter transaction field, select Income
In the Income dialog, enter the following:
- Transaction date: Enter the date you sold the shares.
- Security name: Select the ESPP security from the list.
- Miscellaneous: Enter the difference between the market value of your stock when you sold it and the discount at which you purchased it.
  For example, if the market price of your stock when you decide to sell is $1000.00, but you purchased it for only $850.00, enter a MiscIncX transaction for $150.00.
- Transfer account: Type the name of the current transaction list.
  In other words, transfer this amount back into the same account. This marks the difference between discounted price and market price as salary income without changing the actual balance of your account.
Click Enter/Done.
In the investment transaction list click Enter Transaction.
In the Enter Transaction field, select Sell.
Record the sale of your shares at market price.

If you hold the shares for more than one year after the purchase date and more than two years from the beginning of the applicable offering period

If you hold the stock for the one-year/two-year period, a smaller part of your gain is taxed as ordinary income. This amount is the lesser of: a) the 15% discount at the Offering Date and b) the sale price of the stock minus the purchase price you paid for the stock. Capital gain is calculated as the sale price minus the cost basis. Cost basis is calculated by adding the bargain element (ordinary income) to the amount actually paid.

In the investment transaction list, click Enter Transaction.
In the Enter Transaction field, select Income.
In the Income dialog, enter the following:
- Miscellaneous: Enter the difference between the market value of your stock when you sell it and the discount at which you purchased it.
  For example, if the market price of your stock when you decide to sell is $1000.00, but you purchased it for only $850.00, enter a MiscIncX transaction for $150.00.
- Category: Select Salary.
In the Transfer Account field, type in the name of the account you're working in.
In other words, transfer this amount back into the same account. This marks the difference between discounted price and market price as salary income without changing the actual balance of your account. Quicken displays a warning that you're creating a transfer from within the same account.
Click Save to record the transaction, and then click OK to dismiss the warning.
Enter a RtrnCapX transaction in the transaction list for the negative amount of the difference between the market value of your stock when you sell it and the discount at which you bought it.
For example, if the MiscIncX transaction was for $150.00, the RtrnCapX transaction will be for -$150.00.
In the Transfer Account field, type in the name of the account you're working in.
In other words, transfer this amount back into the same account. This raises the cost basis of the security without changing the actual balance of your account.
Click Save to record the transaction, and then click OK to dismiss the warning.
Enter a Sell transaction to sell your shares at the market price.