Message Font: Serif | Sans-Serif
No. of Recommendations: 0
<<Annually the company I work for purchases shares of its own stock at the beginning of the year at a
discount. It then distributes these shares to its employees as a bonus at the end of the year at market
value. What is my tax basis in the shares of stock I receive as a bonus? Since it cost me nothing to
receive this stock, would it be considered a capital gain or ordinary income? At what tax rate?>>

As KAT noted, it is not really possible for your employer to "give" you shares of stock. If these shares ARE provided to you, generally the FMV of the shares will be included in your W-2, and you'll get hit with payroll and withholding taxes on the "gift".

Your basis, then, would be the amount that was included in your W-2 for the FMV of the shares. Your holding period would begin on the date that the shares were taken into income by you, and your basis would be the amount that you were required to report as income.

Hope this helps...
TMF Taxes
Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.