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Articles

IRS Form 3922 For ESPPs: What You Need To Know, And How It Can Help You Understand ESPP Taxation This is premium content

Stock purchases made through an ESPP during a calendar year are reported to you and the IRS on Form 3922 early in the following year. This article explains what you need to know about the information on the form, and how the form can help you better understand the complexities of ESPP taxation.

VIDEO! Employee Stock Purchase Plans (ESPPs): Taxes

To maximize the benefits of your employee stock purchase plan (ESPP), you must understand the five key tax rules explained in this video. Illustrated by animated examples, the covered concepts include the special rules that depend on how long you hold the shares. Running time: 4:24

ESPPs 101: Taxation Made Simple This is premium content

Your employee stock purchase plan may be one of the best benefits offered by your company. However, to appreciate the advantages of enrolling in the ESPP you must understand the tax consequences of participation. This article explains the tax basics.
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Fundamentals Of Employee Stock Purchase Plans (Part 3): Tax Treatment Of Your Purchases And Sales This is premium content

Now let's look at the employee tax issues associated with employee stock purchase plans (ESPPs). ESPP tax rules can be more confusing and less logical than those that govern stock options.

Fundamentals Of Employee Stock Purchase Plans (Part 4): Down Markets And Other Tax Topics This is premium content

In Part 4 we consider the taxation of employee stock purchase plans (ESPPs) that are not qualified under Section 423, and the tax issues of down markets, death, and withholding.

Final ISO Regulations Affect Stock Plan Design, Optionholders, And Advisors (Part 1) This is premium content

The final rules clarify and consolidate a tangle of proposed, temporary, and final regulations, as well as other guidance, that governed the taxation of ISOs, including rules for disqualifying dispositions.

Final ISO Regulations Affect Stock Plan Design, Optionholders, And Advisors (Part 2) This is premium content

The final rules clarify and consolidate a tangle of proposed, temporary, and final regulations, as well as other guidance, that governed the taxation of ISOs, including rules for the $100,000 ISO limit.

Global Tax Guide To Equity Compensation For International & Cross-Border Employees UPDATES!

The Global Tax Guide explains the taxation of equity awards in 32 countries: stock options, restricted stock, restricted stock units, performance shares, stock appreciation rights, and employee stock purchase plans. The country profiles are regularly reviewed and updated as needed. We do our best to keep the writing lively.

FAQs

What are the eventual tax consequences of participating in a tax-qualified Section 423 employee stock purchase plan (ESPP)?

The rules of ESPP taxation are more confusing than those of stock options and restricted stock. You are not taxed when the shares are purchased: only at...

What is an ESPP disqualifying disposition, what can cause it, and why does my company care? This is premium content

A disqualifying disposition occurs when you sell or otherwise...
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What do I need to know about the information on IRS Form 3922 for ESPPs? This is premium content

Your company is required to file Form 3922 with the IRS and either give you a copy or present the same information on a substitute document. The form contains information about your purchases in your company's tax-qualified ESPP during the prior tax year. With this reporting, the IRS now knows more information about your ESPP purchases than it did before, particularly with regard to your...

If I do not meet the ESPP holding-period requirements to receive favorable tax treatment, how will I be taxed when I sell the stock? This is premium content

If you sell or otherwise dispose of the stock without meeting the holding period rules, then you owe taxes for the spread between the...

Will I receive information statements from my company about ESPP purchases or option exercises? Will I receive Form 3922 or Form 3921? This is premium content

Companies make some information available voluntarily, while the reporting of other information is mandatory. Section 6039(a) of the Internal Revenue Code requires companies to send an information statement to employees who have exercised incentive stock options or have made purchases in a tax-qualified Section 423 employee stock purchase plan. ISO exercises are reported on IRS Form 3921. ESPP purchases are reported on IRS Form 3922...

Do you have a brief overview of the tax treatment for stock options, restricted stock, RSUs, and ESPPs? This is premium content

The table in this FAQ shows the types of taxes, when they are triggered, and the tax withholding (if any) for various forms of equity compensation granted in the United States. For details, examples, and illustrations...

When I sell my ESPP shares, how will I be taxed if I have met the holding-period requirements under Section 423 for tax-qualified ESPPs? This is premium content

You may have both ordinary income and capital gain when you meet the holding-period requirements (this is a qualifying disposition under the tax code). The answer depends on whether...

My company's ESPP is not tax-qualified under Internal Revenue Code Section 423. What is the tax treatment for a stock purchase and sale? This is premium content

"Not qualified" means that your company's ESPP does not meet the requirements under Section 423 of the Internal Revenue Code. Its mechanics and procedures may be the same as a tax-qualified ESPP, but the favorable tax treatment does not...

My company has a basic ESPP without a discount but also without commissions on purchase. Is the unpaid commission considered taxable compensation? This is premium content

ESPPs do not usually set a commission on purchases, so the company is probably not paying a commission directly for you. In the common ESPP structure, the broker or transfer agent charges...