How To Calculate Cost Basis ESPP

The ESPP or the Employee Stock Purchase Plan is an option offered for employees to purchase stocks from the company that they work for, at a greatly discounted rate. Apart from the discounts, the stocks are usually offered with a decreased fee on the brokerage. And because you are purchasing stocks from your own company, you will have an idea of exactly what to expect from the company, based on the performance of your firm. When you decide to sell your shares or when retirement years crawl in, here’s how you can compute for the cost basis of ESPP.

Note the fees. First, you should have an idea of the fees that a share holder is charged with. These fees include the brokerage fees, the administration fees, and the transaction fees or commissions from the brokers and agents who have handled your shares and stocks. To have an idea of these fees, you can request for the investment policies and investment procedures copy, which can be obtained from the Human Resource Department in your firm.

Note your stock purchases. Next, contact the investment firm that manages your shares and the Employee Stock Purchase Plan. Form the firm, you should be able to get the investment statement, which will provide you with a summary of the shares, and stocks that you have purchased or which have been made using your Employee Stock Purchase Plan. You should note the amount of money that was used to buy the shares, which is indicated in the portfolio. You can do this accurately by noting down the cost of every share that was purchased, as well as the sum of the shares that were bought by the corporation using your Employee Stock Purchase Plan.

Get the total cost basis. With these in mind, you will be able to calculate for the cost of the stocks and the shares that you have bought, as well as how much the brokerage fees were for each stock. Do this by adding the stock cost, multiplied by the total number of stocks. Add the other fees such as the brokerage, commission, and administration fees. Divide these by the number of stocks and the present stock value. You should end up with the cost for each stock. This should be the basic selling price for your ESPP shares.

Selling. When you share your ESPP shares, you can either make use of the same brokers who have worked for your corporation, or you can find your own broker and agent, especially if you have accumulated plenty of shares from your Employee Stock Purchase Plan. A good broker should be able to sell the stocks with enough profit on your part to retire with a good fund to support you through the rest of your years.

The Employee Stock Purchase Plan is a great way to increase your profit from the company that you work for. Because the ESPP is a type of investment, it is also an excellent way for you to help your company out, which results in a more competitive firm.


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