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The woman who did his taxes put one thousand sixty six dollars and fifty one cents on the Capital Gain Distribution line and added it to his income.

Well, the woman is a loon. Ok, maybe that's a bit harsh. Let's just say she's wrong. Your friend doesn't have a capital gain distribution - that's something you get from mutual funds. When you sell a stock, you have a capital gain, which is reported on Schedule D, which also requires that you use Form 1040. (Perhaps the tax preparer was trying desperately to use a 1040A, which is a simpler form, and which does allow income in the form of cap gains distributions. But again, that's the wrong way to deal with this income...)

You're right, your friend should be paying taxes on the difference between what he received ($1066.51) and what the shares cost him when he bought them, through an employee stock purchase plan, payroll withholding, or whatever. Let's hope he has records of his purchases, or can get them from WMT's payroll/accounting people.

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