Re: ESPP in Money 2005 by Bill
Bill
Sat Feb 18 00:47:27 CST 2006
Chris, I believe you're thinking of Non-Qualified Stock Option grants to
Employees -- these are grants of stock options (not shares) that can be
converted at some future date at a specified 'strike' price (presumably that
would be lower than the price at the time of conversion). Such stock options
vest over a period of years, and once they are vested can be converted to
actual shares. (There are usually several conversion options, including
convert to real stock and hold, convert to real stock and sell, etc.)
An Employee Stock Purchase Plan (ESPP) on the other hand simply allows
employees to take a payroll deduction to purchase company stock (often) at a
discount. These shares are immediately owned by the employee (there is no
vesting period) and like any other stock its up to the employee what they
want to do with it.
To handle that in Money, create an investment account. Then simply have the
payroll deduction transfered to the cash portion of the investment account.
When you find out how many shares you purchased with those funds, record a
Buy for the number of shares of that stock and for that amount (the price
will fill in automatically). Be sure to reconcile these against the
statement from the brokerage handling the shares. When you sell the shares,
you'll treat them as you would any other sale of stock. (Note that figuring
out the cost basis of the sold shares for tax reporting purposes may be a
fairly complicated process. But that's a different issue...)
Hope that helps,
Bill
"Chris Cowles" wrote:
> "SeaKan" <mattandkaren@highstream.net> wrote in message
> news:11vd9i2nh2ju844@corp.supernews.com...
> > how can i enter an employee stock purchase plan in money 2005? I don't
> > see how.
>
> Money does support employee stock options, but they're not suited for ESPPs.
> I've never had employee stock options, but my understanding is that grants
> are for specific amounts at a specific price, vesting on a specific date(s).
> My wife's ESPP at HCA vests on a specific date but, other than that,
> everything else is variable until the purchase actually happens. In
> addition, the only employee stock option exercise option in Money is
> exercise and sell. In the ESPP, you don't have to sell to exercise.
>
> What I do is simply record the payroll deductions as transfers to the cash
> portion of the investment account. I record the buy and sell as ordinary
> transactions. A memo on the buy records the FMV on the date of purchase, as
> provided on the statement.
>
> Because we immediately sell the stock, it's a disqualified disposal. I
> account for that by entering a $0 split transaction in the cash account. It
> reduces capital gains income and increases an ordinary income category
> affecting W-2 line 1.
>
> In the case of disqualified disposal, you also have to manually increase the
> basis by the amount of ordinary income. Otherwise you pay capital gains on
> the sale, in addition to the tax on ordinary income reported by your
> employer.
>
> Hope this helps.
> --
> Chris Cowles
> Gainesville, FL
>
>
>
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