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Boeing ShareValue Trust

General Tax Information on Award Distributions


The Company is required to withhold all applicable taxes and legally-required deductions before making an award distribution to each participant.

Employees on non-U.S. Payrolls

Any award distribution will be made in cash and are subject to local country tax withholding regulations. Consult with your local HR/Payroll Team, if you have questions regarding your local country regulations. This income is reported on the local form for employment taxation purposes.

Employees on U.S. Payrolls

Distributions Are Taxable Income as Supplemental Wages

The Internal Revenue Service (IRS) issues the various regulations to enforce the U.S. Internal Revenue Code (IRC). The information provided below are highlights based on current federal tax laws. As always, employees should consult their accountant or tax advisor to determine impact of any ShareValue Trust award distribution, cash and/or Boeing stock may have on their federal, state, and local income tax filings. Neither Boeing nor Computershare (Boeing's stock transfer agent) will provide tax advice.

Boeing employees that work in the U.S. may receive consultation services as offered under the Employee Assistance Program (EAP).

For any award distribution, here is the general process flow.

Table 3 - Award Distribution Process Overview

Step Action/Event
1 Individual award distribution amount determined using cash value
2 Based on individual award distribution determined in Step 1, payroll computes and withholds all applicable U.S. taxes and legal orders (garnishments, etc.).
  • Federal income tax at the supplemental withholding rate.
  • FICA (Social Security and Medicare)
  • Applicable state and local taxes.
General Notes.
  • This pre-tax income is reported on Form W-2.
  • The Internal Revenue Service (IRS) regulations consider awards under this program as supplemental wage payments. Based on IRS regulations relating to supplemental wage payments, a flat federal income tax rate applies.
  • The state income tax withholding rate for supplemental wage payments depends on each state's regulations. Former employees' distributions are taxed using the state where they last worked, not the state where they are currently residing.
  • Further, this income is not considered earnings for any other Boeing compensation or benefit plan such as Savings, pension, etc.
  • Beneficiaries of deceased employees will receive a 1099 Form and receive cash distribution only -- no shares of stock are issued provided the employee's date of death is known prior to the period end date.
3 After taxes withheld as described in Step 2, and applicable legal orders are withheld, the remaining individual distribution amount is converted into full shares of Boeing stock. Any residual cash amount remaining after conversion to stock is then paid in cash.
4 Computershare issues Share Account Statement -- Direct Registration Advice (DRS) statement showing stock award and mails to home address as listed in Boeing records.
5 Employees receive Computershare package, which includes information on choices available regarding their stock award. Note that if shares are sold, the income from the sale is also tax reportable. The holder would receive a 1099-B.

Table 4 - Illustration of U.S. Supplemental Wage Withholding Process

For this illustration, we will use a $2,000 pre-tax award distribution and a Boeing stock price of $80. The stock price used in the calculation is the price of the Boeing stock on June 30 when the investment period ended.

Step Action/Event
1

Calculate supplemental wage withholdings:

    25.00% federal per IRS regulations
      7.65% combined social security and medicare
    32.65% mandatory federal withholding
    XXX% your state and any local withholding
2
    $2,000.00 pre-tax award distribution
        653.00 federal tax withholding (32.65% of $2,000)
    $1,347.00 remaining value
3 $1,347 divided by $80 (stock price) = 16.837
4 16 shares will be issued

Note: the above illustrative values will change depending on your state and any local tax withholdings.

Impact on Taxes if You Sell Your Shares

Should you decide to sell your shares, this information is reported to the IRS and as part of the check payment from Computershare you will receive Form 1099-B. You should keep the Form 1099-B and other documents you receive associated with the stock award in a safe place--they are critical tax documents that will be needed to support your tax filing. Other important notes about selling your shares are:

  • Gain or Loss in Selling the Asset
    • Selling your Boeing stock is treated as a sale of an asset (Gain or Loss) under IRS regulations. This is a separate taxable event and in addition to the tax withholding described in Table 4. The Gain/Loss is based on the price of the stock on the date it was sold as compared to the price of the stock when issued.
    • Table 2 - Award Distribution Profile section provides the Cost Basis per Share Price.
    • For additional information regarding potential tax implications, consult your accountant or tax advisor and/or contact the IRS. You may want to review these IRS publications (typically updated to support each tax/calendar year):
  • Certifying your TIN/SSN. Boeing can't do this for you; you must do it yourself with Computershare. If you have not certified your Tax Identification Number (TIN) (your SSN) with Computershare, they are required by current IRS regulations to withhold and pay to the IRS 28% of any payment - this is in addition to the taxes withheld described above in Table 4. There are two ways to certify your TIN/SSN.
    1. 1. Online through Computershare at Computershare - Shareholder Services. In the left hand column under "Manage", click the "W8 / W9 Certification" link.
    2. 2. You may complete and return the Substitute Form W-9 by mail. This form is included in the Computershare mailing along with a pre-addressed envelope. If Computershare does not have a properly completed form in its possession when creating any dividend check that may be payable to you or, if you chose to sell your shares, when making your payment for selling, the 28% withholding rule applies.
  • The Boeing Voluntary Selling/Purchasing Program
    (Note: This program is sometimes referred to as the Small Shareholder Program or Oddlot Program.)
    Boeing provides this voluntary program to those that wish to either sell their stock or purchase additional shares during the open period.
    • As a convenience, special phone service center and web link are set up and active during this period.
    • You are not required to either sell or purchase additional stock.
    • This program is of limited duration and usually expires about 60 calendar days following the date the stock is issued resulting from any ShareValue Trust award distribution. The materials received from Computershare along with Boeing internal communications via Boeing News Now (BNN) will provide the start and end dates of this program.
    • Information on the transaction fees associated with either selling or purchasing is included in the Computershare mailing.
    • Some general notes include:
      • If selling:
        • ALL shares must be sold.
        • Shares submitted for sale will be matched to shares requested for purchase by other shareholders participating in the program on that day. The balance of unmatched shares will be traded in the open market within a few days of receipt of your sale request, and a weighted average price will be determined from these trades.
        • The day your sales will be sold will not be the same day Computershare receives your sale request.
        • The weighted average market price will most likely be different than the Cost Share per Basis as set when the stock was issued.
      • If purchasing additional shares:
        • You must purchase the minimum number to reach the threshold amount established for the program. This information is provided in the Computershare mailing.
        • Shares submitted for sale will be matched to shares requested for purchase by other shareholders participating in the program on that day. The balance of unmatched shares will be traded in the open market within a few days of receipt of your sale request, and a weighted average price will be determined from these trades.
        • The day your sales will be purchased will not be the same day Computershare receives your purchase request.
        • The weighted average market price will most likely be different than the Cost Share per Basis as set when the stock was issued.

 

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