Conference 7.286::digital

    Depends on the expense, Patrick... relocation is included but 
    standard, fully-reimbursed travel expenses and such are not.
    
    
    Marge
    

    Caution!  The previous is only partially true.  In general, things
    that you will be taxed for are included on the W2.  Things that
    you will not be taxed for are not.  For example, milage reimbursements
    are not on the W2, but you don't need to pay tax on them because
    they are not income; they are reimbursements for business expens.
    PART of relocation expense is on the W2.  That is because the IRS
    has limited the amount of relocation that is not taxable.  If DEC
    spends more than that amount on moving you, that additional amount
    goes on your W2 and is taxable.
    
    Caution again!  I am not a tax lawyer.   I will not represent you
    before the IRS if I am wrong!  Do not believe me!  (In particular,
    I would not want to guarantee that EVERY or ALL taxable reimbursement
    is included on the W2)

    Burns

    When I sell stock purchased (recently) through the Employee Stock
    Purchase Plan, I receive a letter from DEC at the end of the year
    detailing how much of the gain has been added to my W-2. I believe
    that last year some tuition reimbursements were considered to be
    taxable income, so they would have been added. I suspect that any
    such additions included a formal letter detailing them (I remember
    getting one of those many years ago for relocation mileage). Some
    of these taxable benefits include a "tax adder". This is added to
    the income and also listed as a withholding and reported in both
    figures of the W-2.
    
    I always save my last paystub of the year. This has the gross taxable
    pay (SAVE is deducted of course) and the federal withholding deducted
    from my salary. This allows me to check for these non-salary affects.
    
    Hope this (non-legal) advice helps a bit.

    Re .3:
    
    The stock gain added to your W-2 is the 15% difference that Digital
    allows when you purchase through the Employee Stock Plan, i.e. the
    difference between fair market value and Digital's price to you
    when you buy through the plan.  You still need to report capital
    gains from the SALE of the stock -- the difference between your
    purchase price and selling price -- on form 1099 with your 1040.
    (I didn't realize that the first year I sold stock, since the letter
    from DEC is not explicit about what gain is being added).
    
    

Note: the stock gain is added to your W-2 ONLY IF:

1) You sold the stock thru DEC  or
2) You replied to one of the 'verification' notices you are sent 
   periodically if you hold you own shares.
	The latter is a bit nasty.  Since, intuitively, if you sold
	the shares yourself, you wouldn't expect the data on your W2.

re .4. & .5

	The gain on stock purchased from the ESPP is reported on your
W-2 *only* if you sell it within 18 months of when it was bought.  The
gain on your W-2 is the difference between the price you paid (85% of FMV)
and the price you sold it for.  You owe *no* capital gains tax on this
sale.

	If you sell stock which was purchased through ESPP but you
held more than 18 months, nothing is reported on W-2 and your gain
(the difference between the price you paid (85% of FMV) and the price 
you sold it for) is all taxable as long-term capital gain.

Frank

    Long Term Capital gain?  Welcome to 1987.
    

>	If you sell stock which was purchased through ESPP but you
>held more than 18 months, nothing is reported on W-2 and your gain
>(the difference between the price you paid (85% of FMV) and the price 
>you sold it for) is all taxable as long-term capital gain.

This is not what the prospectus states.  The prospectus states that the
difference between what you paid for the stock and the FMV on the BEGINNING
day of the payment period is ordinary compensation income.  Your "basis"
is the FMV on the beginning of the period.  The difference between the
proceeds and the basis is taxable as a capital gain.  (And even in 1987
there will presumably be different places on the new 1040 for ordinary
compensation income and capital gains.)

/john

    .8 is the closest yet.  You DO pay BOTH ordinary income AND capital
    gain regardless of whether you have held it for < or > than 18 months.
    If held less than 18 months, you pay ordinary on the diff between
    what you paid and the FMV at the beginning of the period like John
    says.  After 18 months, you pay ordinary on the diff between what
    you paid and what DEC used as the basis for determining the 15 %
    discount.  This latter is lower.  In any case, you then use the
    number that you subtracted your price from as the basis for your
    capital gains.  This is spelled out as clearly as it is possible
    to spell out in the perspectus.  It is also spelled on even more
    clearly (with fill-in-the-blanks) on the letter that comes with
    the W2 addon.
    
    Burns
    

BTW:  For 1987 - Capital gains are taxed at a maximum of 28%, even 
though your income may be taxed at a rate up to 38.5%.

According to my prospectus, both .8 and .9 are wrong.  The prospectus says
that the portion that's ordinary income is 15% of the FMV at the beginning
of the payment period (or the total gain, whichever is less).

/john

    re .11 and .9:  Just goes to show you that you should not trust
    notes-file lawyers or tax accountants, especially when they don't
    have the source material right in front of them.
    
    BTW, I was thinking about it, and I'm not sure but what the <18
    months case may be more complicated also.  There might be something
    about taking the FMV either at the beginning or the end of the period,
    whichever is greater.  I'll try to remember to look it up and report
    in detail, but no promises...
    
    Burns
    

    What does one use in lieu of a 1099b (or whatever it is)?
    
    - M

    What is form 1099b?  The thing where interest and or dividends are
    reported?  If so, you don't use anything.  Those things don't have
    to be submitted with your return anyway.
    
    Burns
    

>    What is form 1099b?  The thing where interest and or dividends are
>    reported?  If so, you don't use anything.  Those things don't have
>    to be submitted with your return anyway.

Ever look at the top of Schedule D?

"Report here the total sales of stocks, bonds, etc., reported for 1986 by
your broker to you on Form(s) 1099-B or an equivalent substitute statement(s).
If this amount differes from the total of lines 2b and 9b, column (d), attach
a statement explaining the difference."

And from the instructions: "There may be a difference ... if you reported
a transaction in one year but did not receive a Form 1099-B until the
following year."

Having never sold stock until this past December, I don't know if this is
the case or not, but I've heard that the statement of ownership is marked
"substitute 1099-B."  For sales during December, it wouldn't appear until
the following year, so it appears a "statement explaining the difference"
is required.

/john

> "Report here the total sales of stocks, bonds, etc., reported for 1986 by
> your broker to you on Form(s) 1099-B or an equivalent substitute statement(s).
					     -------------------------------

    Well, what do you call the statement that you get from Investor
    Services?  It certainly meets the description of Schedule D.

Dave,

READ BEFORE YOU WRITE!

For sales in December, you don't get a statement until June.  Taxes are due
in April.

I requested an extra statement of ownership.  No where on it is there the
notice "substitute 1099-B" which appears on the "equivalent substitute
statement" I get from other brokers.  Thus I have no way of knowing whether
DEC reported the sale in 1986 or won't until next year.

/john

>   For sales in December, you don't get a statement until June.  Taxes are due
>   in April.

   Huh?  The statement I got (in Feb.) included a sale I made in Jan. 
   I didn't have any problem figuring my taxes.

Interesting.  I received no statement.  Note that I sold surrendered (i.e.
purchased before the statement of ownership option existed) shares.

/john