Administering Stock Purchase Dispositions

This chapter provides an overview of stock purchase dispositions and discusses how to track dispositions.

Understanding Stock Purchase Dispositions

This section lists prerequisites and provides an overview of dispositions.

Prerequisites

Before you begin processing participant dispositions:

Establish disposition holding periods using the Governing Body Rules - Stock Purchase Rules page.
Set up earnings codes using the Stock Details - Stock Purchases page.
Confirm a stock purchase using the Confirm Purchase Process page.

Dispositions Overview

A sale or transfer of stock purchased through a stock purchase plan, is called a qualifying disposition or disqualifying disposition, depending on the holding period requirements set up in the governing body rules.

For IRS governed plans, a disqualifying disposition is a sale or transfer of stock that has been held less than two years from the grant date and less than one year from the purchase date. A corporation is entitled to a tax deduction equal to the participant’s ordinary income on the disqualifying disposition. To claim the tax deduction, a corporation must report the ordinary income on the participant’s W-2 form. When the holding period is met, the sale is considered a qualifying disposition.

Because companies receive a tax break if the disqualifying disposition holding period is not met, participants are encouraged to report stock sales to their companies. If shares are held at a brokerage firm, a company might require that the brokerage firm report the dispositions. You must determine the best way to gather information about participant dispositions so that you can track the tax implications of the transactions.

Stock Administration determines if dispositions are qualified or disqualified according to your business rules. If you use Payroll for North America, you can send the disposition information directly to payroll for reporting in the participant’s earnings statement.

Tracking Dispositions

This section provides an overview of tracking dispositions and discusses how to:

Record a participant’s stock sales.
View stock disposition payroll details.
Generate a reporting table for stock disposition queries.

Understanding Tracking Dispositions

You record dispositions on the Stock Purchase Dispositions page. Depending on the holding period rules you defined on the Governing Body Rules - Stock Purchase Rules page, the system determines whether the disposition is qualified or not.

If you use Payroll for North America and the participant’s pay group is USA, you can send the disposition information directly to payroll. Otherwise you can send the Reconciliation report to your payroll administrator.

The country code must be USA to integrate with Payroll for North America. After the disposition is confirmed and you send the disposition to payroll, the system sends the transaction to the Payroll Transaction Table (PSHUP_TXN). When the payroll process executes, it associates the transaction with a particular pay run.

Pages Used to Track Dispositions

Page Name	Object Name	Navigation	Usage
Dispositions	ST_ESPP_DISPOSN	Stock, Stock Purchases, Dispositions	Record a participant’s stock sales. You must first confirm a purchase.
Stock Purchase Disposition Payroll Data	ST_PAYROLL_SBP	Click the Sent to Payroll date link on the Dispositions page.	View payroll details.
Create Query Reporting Table	PRCSRUNCNTL_LC_SBP	Stock, Stock Purchases, Create Query Reporting Table	Generate a temporary table that consolidates purchase disposition information for query reporting.
Dispositions to Payroll	ST_RUNCTL_STESRC1	Stock, Purchase Reports, Disposition, Dispositions to Payroll	Define run parameters for the Dispositions to Payroll report (STES020). This report displays disqualifying dispositions and qualifying dispositions to payroll for W-2 reportable income.
Dispostns to Payroll Reversals (dispositions to payroll reversals)	ST_RUNCTL_STESRC1	Stock, Purchase Reports, Disposition, Dispostns to Payroll Reversals	Define run parameters for the Dispositions to Payroll Reversals report (STES017). This report displays errors sent to payroll that must be reversed.
Disposition Reconciliation	ST_RUNCTL_STESRC1	Stock, Purchase Reports, Disposition, Disposition Reconciliation	Define run parameters for the Disposition Reconciliation report (STES016). This report lists dispositions entered for the purchased stock.

Recording a Participant’s Stock Sales

Access the Stock Purchases - Disposition page.

Stock Purchase Information

Shares Available	Displays the number of shares remaining that can be sold or transferred. This number is recalculated each time you enter a disposition or when the disposition status changes. The number of shares available equals the number of shares purchased less the sum of shares disposed.
Grant FMV	Displays the grant FMV associated with the grant, which is used for calculating ordinary income.

Additional Information

Hold Date	This date is the purchase period end date plus the holding period number of months specified for the stock purchase plan. This date must be greater than or equal to this date, or the system produces a warning message.
Shares Disposed	This number is recalculated each time you enter a disposition or when the disposition status changes.
Shares Pending	Displays the number of shares that are pending confirmation.
Shares Self Service	Displays the number of shares entered as disposed through self-service.
Total Discount	Displays the discount off the purchase price.
Process Group	Displays the process group at the time of the stock purchase. Process groups are defined on the Process Groups setup page.
Begin Date and End Date	Displays the offering period begin and end dates.

Disposition Information

The system checks the rules defined on the Governing Body Rules - Stock Purchase Rules page to determine if the required holding period is met for preferential tax treatment. If the requirements are not met, the disposition is not qualified.

Disposition Number	This number is assigned when you save the page and comes from the Stock Table. It provides an audit trail of all dispositions and cannot be deleted.
Disposition Date	Enter the date of the sale or transfer, which is used to determine whether the disposition is qualifying or disqualifying. Note. This date cannot be earlier than the hold date specified at the stock plan level.
Shares Disposed	Enter the number of shares sold or transferred.
Disposition Price	Enter the sale or transfer price of the disposition.
Disposition Type	Select Sale (default) or Transfer. You must enter the type after the disposition status is changed to Confirmed.
Disposition Source	Select: Administrator: Source of the disposition information is the stock administrator. (Default.) Self Service: Participant reported disposition using the self-service page. Third Party: Broker reports the disposition.
Status	Select the disposition’s current status: Confirmed, Pending (default), and Void.
Disqualifying Disposition	If the system determines that the sale is a disqualifying disposition, it selects this check box.
Total Price	Displays the price of the sale, calculated by multiplying the disposition price by the shares disposed.
Status Date	Displays the date on which the status changed.
Ordinary Income	Displays ordinary income resulting for the disposition.
Sent to Payroll	Displays the date on which the transaction was sent to Payroll for North America or the manual payroll report was run for a disqualifying disposition with ordinary income. Click the date to access the Stock Purchase Disposition Payroll Data page, where you view payroll details.
Update Payroll	Click to send the disposition information to payroll.
Survey Date	This date appears after the stock purchase Disposition Survey report is run and the survey is printed.
Receipt Date	This date appears after the stock purchase Disposition Receipt report is run and the receipt is printed.

Viewing Stock Disposition Payroll Details

Access the Dispositions to Payroll page.

Sent to Payroll Date	Displays the date on which the transaction was sent to payroll or the manual report was run.
Sent to Payroll Source	Identifies how income and taxes were sent to the payee, either through Payroll for North America or manual report.
Paycheck Number	Displays the paycheck number when the transaction was processed through Payroll for North America. This field is blank if a manual report was used.

Generating a Reporting Table for Stock Disposition Queries

You can generate a temporary table that consolidates information from ST_ESPP_PURCH and ST_ESPP_DISPOSN tables for query reporting.

Use the Generate Reporting Table page to run the process that generates the table.