If my client filed an 83b election on a Restricted Stock grant, but the company did not include the income in his W2, how do I enter the income in Proseries?

Forum|Forum|6 years ago
December 7, 2019
8 replies
64 views

I entered the detailed information in the Employee Stock worksheet, clicked the box that it was not on the W-2 and it shows that the income will flow to Line 7. However, ProSeries is also generating a Capital Gain worksheet and asking for info to report a sale of the restricted stock, and I can't figure out how to show the stock as held by the taxpayer, not sold.

ProSeries Professional

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Best answer by itonewbie

This is one thing I don't understand with PS, that everyone seems to be really hung up on this employee stock worksheet.

Did your client actually follow the Rev. Proc. to file the election both with the IRS and the employer?

If so, the employer has an obligation to withhold on and report the income on the W-2 and that would allow them to take the §83(h) deduction.

Your client should work with the employer to get a W-2C issued assuming everything is above board. In case the employer is not cooperative and provided you are satisfied that the election should be valid, you'd then report the income on Line 7 in accordance with the election and attach a F.4852 to the return. Needless to say there's no capital gain.

itonewbieAnswer

Level 15

This is one thing I don't understand with PS, that everyone seems to be really hung up on this employee stock worksheet.

Did your client actually follow the Rev. Proc. to file the election both with the IRS and the employer?

If so, the employer has an obligation to withhold on and report the income on the W-2 and that would allow them to take the §83(h) deduction.

Your client should work with the employer to get a W-2C issued assuming everything is above board. In case the employer is not cooperative and provided you are satisfied that the election should be valid, you'd then report the income on Line 7 in accordance with the election and attach a F.4852 to the return. Needless to say there's no capital gain.

---------------------------------------------------------------------------------Still an AllStar

M

mark28321Author

Level 3

Thank you for your reply. The client did file the election with both, but he is insisting that his employer did not include the income in his W-2. I agree it is incorrect, but I thought I could just use the Employee stock worksheet to report the compensation income. The worksheet appears to allow that the restricted stock grant may not be included in the W-2 since it has a check box for that. It even indicates it will flow to Line 7. However, using this form generates the Capital gain worksheet and I can't override it. I didn't realize I had to use a Form 4852 to report it as compensation. Thanks for your help.

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