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There are some basic tax consequences to keep in mind when you participate in
Comcast Shares:
Because your contributions are deducted from your after-tax pay, your
participation has no impact on your current taxes.
The discount you receive on the purchase of the shares generally is treated as
ordinary income, but the tax on this income is deferred until the year the stock is
sold.
Any gain or loss you realize as a result of purchasing stock is not recognized until
you sell the shares. How that gain or loss is treated for tax purposes will depend
on how long you have held or owned the shares.
Generally speaking, you receive more favorable tax treatment if you meet the two-year
holding period requirement established by the IRS. Depending upon when you sell your
shares, there are a few possible tax treatments you may experience. Each scenario is
described below and includes an example based on the following assumptions:
Scenario One Example: Employee sells shares before holding the shares less than
a year after the purchase.
The $8.20 will be reported on your Comcast W-2 Form as ordinary income.
Calculation of Short-Term
Capital Gain/Loss:
Sale price $33.00
minus Share price at purchase $32.00
Short-Term Capital Gain of $1.00 per share
You will have to report the $1 gain as a short-term capital gain when you file your income
tax return.
Note: If you sell your shares after one year but less than two years from the
beginning of the Offering Period in which you purchased them, you will instead
report the $1 gain as a long-term capital gain when you file your income tax return.
Scenario Two: Employee Sells Shares After Two Years
If you sell your shares after two or more years from the beginning of the Offering Period
in which you purchased them, a portion of your gain is still considered ordinary income.
However, Comcast will not include this amount on your W-2 Form. You must report it
when you file your taxes. The ordinary income is calculated as the lesser of:
15% of the market value of the shares on the first day of the
Offering Period in which they were purchased
or
the amount, if any, by which the market value of the shares on the
date you sell or dispose of them exceeds your purchase price.
Then you must calculate the amount of long-term capital gain (or loss). To do this, add
the price you paid for the stock to the amount of ordinary income you are reporting to
reach an adjusted cost basis. Then subtract this adjusted cost basis from the sale price of
the stock.
The lesser amount — $4.20 — should be reported as ordinary income when you file your
taxes. In addition, you may have a long-term capital gain or loss.
Then use that as your basis to calculate the Long-Term Capital Gain/Loss:
Your sale price $33.00
minus Adjusted cost $28.00
equals Long-Term Capital Gain of $5.00 per share
You will have to report a long-term capital gain of $5 as well as $4.20 of ordinary income
when you file your personal tax return.
All of these examples show that the $9.20 difference between your purchase price of
$23.80 and your sale price of $33.00 is taxable. The only variables are what portion of
that $9.20 will be taxed as ordinary income and what portion will be taxed as a short-or
long-term capital gain. See the chart below for a summary.
Sell Shares before Sell Shares after One Year Sell Shares after Two
One Year before 2 Years years
Total Income $9.20 $9.20 $9.20
Ordinary Income $8.20 $8.20 $4.20
Short Term Capital $1.00 $0.00 $0.00
Gain
Long Term Capital $0.00 $1.00 $5.00
Gain
The same examples work for a loss (if you sell shares for less than you paid).
Tax information is solely provided by Comcast Corporation and not the responsibility of Fidelity Investments