[Money Deluxe 2004]

Of a grant for 100 shares that have now vested fully, I choose to sell a
certain portion of it, say 50 shares, and hold on to the remaining 50.

To record this in Money is a bit strange - I have no choice but to
"Exercise & Sell" the 100 shares, and then record a second transaction
for the 50 shares I decided to keep as a "Buy" transaction.

Questions -

1. My broker charges me commission on the sale of 50 shares, not on the
exercise transaction of 100 shares. Do I record that commission in the
exercise & sell transaction for the 100, or the buy transaction of 50?

2. Why does money force this kind of behavior? Why not just exercise
100, and record a separate transaction if and when I sell some of the
exercised shares?

I'm still trying to get all the number to match up...for example, the
broker withheld tax, and I'm not sure where to record that either.

Thanks for any hints.

Exercise and Sell is normally for options. With the growth of restricted
stock awards to replace options, some use it since Money does not really
have a better way. Yours looks like a restricted stock award.
- Set up your grant as 100 shares at $0 strike price
- When they vest, you exercise and sell generating both a taxable event and
cash equal to 100 x market price of share
- You use a portion of cash to buy 50 shares at market price
- You send a withdrawal from the cash account to US government for income
tax, medicare, and social security tax, if you have not exceeded the max.
- left over cash stays in your account. You can put the commision anywhere.
It's the same cash

If you don't do it this way, you don't trigger a tax event and your
income/tax for year will be wrong.
If you just added 100 shares and sold 50, you only trigger tax on the 50.



"H Gohel" <gohel> wrote in message
news:a904
[..]

Thanks for the reply, Michael. I followed what you said, it mostly
makes sense. What I did different:

Michael J. Blazin wrote:
> Exercise and Sell is normally for options. With the growth of restricted
> stock awards to replace options, some use it since Money does not really
> have a better way. Yours looks like a restricted stock award.
> - Set up your grant as 100 shares at $0 strike price

Instead of setting up the grant at $0, I set it to the actual price
offered to me by the company.

> - When they vest, you exercise and sell generating both a taxable event and
> cash equal to 100 x market price of share

I did that, and Money calculated the difference between the sale price
and my offer price.

> - You use a portion of cash to buy 50 shares at market price
> - You send a withdrawal from the cash account to US government for income
> tax, medicare, and social security tax, if you have not exceeded the max.
> - left over cash stays in your account. You can put the commision anywhere.
> It's the same cash

All this works out well. If I go to the Report "Tax-related
transaction" the gain from the sale of the vested stock option comes
through correctly.

Thanks again.

Since you said you had the shares and sold half, I thought you had a grant
instead of option. But it works fine for regular options too. The one
situation I've not used it for, and probably rarest, is using own cash to
buy at strike price. I assume that you exercise and sell, handle tax
consequences, and then buy back full number of shares with remaining cash
plus other cash in account at strike price.
That way you've accounted for income this time and lower cost of shares for
future sales/taxes.

Don't forget to do your schedule D at tax time. Your broker reports the
transaction as selling 100 shares at market price. If you don't report
transaction with cost at market price, IRS assumes unreported income. Some
people, yours truly, only saw transaction as salary action and never thought
about reporting a no impact capital transaction. Those people get letters
from the IRS because the nominal amounts are huge.

"H Gohel" <gohel> wrote in message
news:1032
[..]

Michael J. Blazin wrote:
> Since you said you had the shares and sold half, I thought you had a grant
> instead of option. But it works fine for regular options too.

In the original post I wasn't too careful about the wording - I said
"grant" when I really meant "option."

> Don't forget to do your schedule D at tax time. Your broker reports the
> transaction as selling 100 shares at market price.

Actually this transaction is from last year, so I was able to match up
the final numbers with my tax filing and ensure that everything was
correct, and now I'll know how to handle it this year. Last year I
calculated this portion outside of MS Money.