[groundhum]

Any advice on how to manage this in Q04 will be greatly appreciated as I'm stumped.
When stock grants vest, a number of shares is sold to pay taxes (e.g. if 1000 shares are granted, 300 are sold to pay taxes, and 700 are put into a brokerage account). I move shares into the brokerage account in Quicken, which allows me to track the account value, but I can't figure out how to account for the taxes paid let alone the income from the shares left over after supporting various factions of the government. A split transaction would do it, but a transaction in a brokerage account can't be split.
The real problem lies in the fact that any tax planning calculations are bogus because the additional shares don't show up as income, and the taxes paid aren't accounted for in Quicken.
Suggestions? tia...

[machenry]

The type of stock option affects how you'd want to track this. I am not an accountant, you want to review this information with a tax professional.
Non-qualified stock options [the most common type of grant] are taxed as capital gains when exercised. People most commonly use a 'same-day sale', where the shares are bought and sold on the same day. You'd enter the buy and sell in Quicken as separate transactions, and the Capital Gains report would reflect the proper amount.
Incentive stock options [commonly given to senior managers] are much more complicated, because exercising them can be treated as ordinary income unless they are held for some time before selling. Alternative minimum taxes [AMT] may also be assessed on their exercise, which sounds like what you're deaing with. You and your accountant need to work out what type of taxes are applicable in this type of transaction.
This helpful so far? FYI, here's an article from Turbotax.com that gives an overview of this area.
As to how to track all this [your original question!], it depends on how you currently track cash in your brokerage account. Do you have a separate account for cash, or is it all in the brokerage account?

[groundhum]

Guess what? It's not an option. It's a grant, which is what I posted. I do believe we've covered option accounting, and it's even more bizarre (and more impossible and/or inadequate). That's why I gave up and own Excel, and more or less learned how to use it to my benefit.

[machenry]

ahh, isn't the world of words fun!?! i'm referring to employee stock options, not puts and calls:
- the grant was made to you on a particular date with a vesting schedule, before which you pay nothing?
- once they've vested, you have the 'option' to exercise your right to purchase them, is that correct? you're not required to do it?
- you pay some price per share to acquire them, yes? below the current asking price on the market?

[groundhum]

No. Not options. Not puts. Not calls.
It is a stock grant. It costs nothing (if you don't count the taxes). It works this way:
The company says, "You can have these x shares if you stick around until a year from now."
One year hence, the company says, "Thanks for sticking around another year. Here are the shares we promised, except we sold 28% and gave the money to the government."
Now, 72% of the stock the company promised me a year ago is mine, free & clear. No exercise price. No paying a strike price.
I pay nothing. Shares of stock are granted to me.

[machenry]

I'm pretty sure that we are talking about the same thing - as mentioned previously, the IRS considers there to be two type of grants, nonqualified or incentive. check this web page out [found it by Googling "tax reporting of stock grants"]
some other ways clarify this:
- does your payroll or HR department provide you with any guidance on how to report the sale?
- your grant letter has an issue date as well as a vesting date, correct - "You can have these x shares if you stick around until a year from now." ?
- how does your company report the taxes paid on the exercise to you - on your W-2? On a 1099 [capital gains]? On some other IRS form?
- Is there a price associated with the grant [look at the letter]?
we're actually prety close to knowing how to enter this in Quicken - it depends on the type of grant. i encourage you to review your documentation and talk with the appropriate folks at your employer to clarify exactly what type of grant you have.