Court upholds tax on employee stock gains after couple fails to prove W-2 inclusion
Anthony J. Moiseshyn and Mai Moiseshyn v. Commissioner. United States Tax Court. No. 6587-24. T.C. Memo. 2026-114.
Just because the plan says stock purchase income usually lands on your W-2 doesn’t mean your employer actually reported your sale. The Moiseshyns still owe tax on $32,146.74 of unreported securities income. Welcome to the paperwork Olympics.
Holding
The Tax Court found that Anthony and Mai Moiseshyn were required to include $32,146.74 of securities income, $1,345 of dividends and $146 of interest in their 2021 income. The accuracy-related penalty was conceded by the IRS. The Court ordered the parties to calculate their final tax liability under Rule 155.
Why It Matters
Employer stock reporting requires a transaction-specific reconciliation. General plan guidance did not establish what the employer included in wages for the year at issue. The Court required evidence linking the disputed stock income to the actual Form W-2.
A basis concession narrowed the dispute without eliminating it. Before trial, the IRS increased the stock’s basis, the amount used to measure taxable gain. That adjustment reduced the remaining securities income to $32,146.74. The ruling does not authorize taxing amounts that a taxpayer proves the employer already reported.
The evidentiary foundation mattered. The taxpayers did not challenge the accuracy of the Forms 1099. Those forms therefore supplied the minimum evidence connecting them to the income. A reasonable dispute about third-party reporting would require separate analysis under § 6201(d).
This is a routine application of proof requirements. The memorandum opinion does not create new rules for employee stock purchase plans. It also does not uphold a penalty: the IRS expressly conceded that issue before trial.