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Annotated diagram of Schedule DTax errors can be costly! Don't draw unwanted attention from the IRS. Our Tax Center explains and illustrates the tax rules for sales of company stock, W-2s, withholding, estimated taxes, AMT, and more.


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Year-End Strategies For Employee Stock Purchase Plans: Ideas To Consider This is premium content

Matt Simon
UPDATES! When you think about year-end financial and tax planning, don't forget to review shares acquired through an employee stock purchase plan. This article outlines issues and strategies to contemplate.

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

Alisa Baker
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.

ESPP Choices: Flip Or Hold? (Part 2) This is premium content

Timothy A. Farmer and Gregory G. Geisler
You can build your employee stock purchase plan into your long-range savings and retirement strategy. This article compares buying company stock at a discount through your ESPP to putting the same money into your 401(k) or another retirement plan.

Tax Planning For Options, Restricted Stock, And ESPPs After 2013 Tax Law Changes: High-Income Taxpayers Impacted Most (Part 1)

Tom Davison and William Whitaker
The beginning of 2013 brought notable shifts in tax rates for people at higher income levels. Part 1 surveys the important tax changes and considers their impact on planning.

Employee Stock Purchase Plans & Your Financial Planning (Part 1) This is premium content

Bruce Brumberg
Employee stock purchase plans (ESPPs) are popular and prevalent at most public companies. However, the structure of these plans is changing. These modifications may affect your decision to participate in your ESPP and its place in your financial planning.

How To Report Sales Of Company Stock On Your Tax Return

The myStockOptions.com Tax Team
Learn how to report sales of stock on your tax return. Annotated diagrams of Form 8949 and Schedule D help you make sense of the reporting rules.

Avoid Tax-Return Mistakes With Stock Options & ESPPs: What You Need To Know This is premium content

Bruce Brumberg and Lynnette Khalfani
UPDATES! The 2015 tax-return season has the potential to be more confusing than most if you sold stock in 2014. Read this article for tips on reporting stock sales and on other crucial tax-return topics.

How To Avoid Paying Too Much Tax: Understanding The Revised Form 1099-B And Form 8949 For Reporting Stock Sales On Your Tax Return This is premium content

Bruce Brumberg
The stock-sale information provided by brokers on IRS Form 1099-B has changed. Cost-basis reporting, both for your broker on Form 1099-B and for you on your tax return, is now more complex, confusing, and vulnerable to errors. This article explains the crucial facts you must know to avoid overpaying tax or attracting unwanted IRS attention.

VIDEO! Tax-Return Forms & Reporting Rules For Stock Sales

Bruce Brumberg
Learn how to prevent costly tax return mistakes with this animated presentation on IRS Form 1099-B, IRS Form 8949, and Schedule D.

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If I purchase shares in my company's ESPP or sell the stock in a disqualifying disposition, will I need to make estimated tax payments? This is premium content

You need to pay enough tax during the year through withholding or estimated tax payments to avoid penalties and interest. The tax that has to be paid includes...

Can I ever have ordinary income but no actual gain on sales of ESPP stock? This is premium content

Yes, when the market price of the stock has dropped after purchase and you make a disqualifying disposition of the shares...

If my company eliminates the lookback for my ESPP, will the tax treatment change? This is premium content

Assuming this is still a tax-qualified ESPP, the tax treatment stays the same even with no lookback, though it gets even more confusing when...

What, if anything, shows up on my W-2 when I purchase discounted shares of stock under an ESPP?

Nothing in connection with an ESPP purchase is reflected on your Form W-2 unless...

What are the biggest mistakes related to my employee stock purchase plan that I can make on my tax return, and how can I avoid them? This is premium content

It is all too easy to make costly tax-return errors that attract unwanted IRS attention. Learn how to prevent mistakes...

What are the big changes in 2015 with reporting stock sales on my tax return? Why have these changes occurred?

Major changes have occurred in the tax reporting for stock sales during the past few years, making accurate tax-return reporting more complex and difficult...

In the cost basis I use to report sales of company stock on my tax return, what part comprises the W-2 income from stock compensation or an ESPP? This is premium content

When your W-2 income is added to the price you paid for the stock, this is your cost basis on your tax return. The table below presents the compensation portion of your tax basis for all types of stock grants and ESPPs...

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...

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...

W-2 diagram! If I sell ESPP shares after the required holding periods, what will appear on my W-2? This is premium content

If you sell ESPP shares in a qualifying disposition, you still...

W-2 diagram! If I make a disqualifying disposition with my ESPP stock, what will appear on my W-2? This is premium content

With a tax-qualified ESPP, nothing appears on your W-2 until you sell the shares. In that year, income is reported in the following boxes of your W-2...

W-2 diagram! My company's employee stock purchase plan is not tax-qualified under Section 423 of the Internal Revenue Code. What will my W-2 show after an ESPP purchase? This is premium content

The gain from your ESPP purchase is totaled on the W-2 with other income in the following boxes...

Form 8949 and Sch. D diagrams! If I sell ESPP shares after the required holding periods, how do I report the sale on my Form 8949 and Schedule D? This is premium content

The sale of your ESPP shares is likely to trigger both ordinary income and capital gain income, as explained...

Form 8949 and Sch. D diagrams! If I make a disqualifying disposition with my ESPP stock, how do I report the sale on Form 8949 and Schedule D of my tax return? This is premium content

You report the sale on Form 8949 and Schedule D to show your capital gain or loss, regardless of any actual gain or loss. This is the difference between...

Form 8949 and Sch. D diagrams! My company's ESPP is not tax-qualified under Section 423 of the Internal Revenue Code. How do I report any gain that results from the sale of my ESPP shares on my federal income-tax return? This is premium content

Form 8949 is where you list the details of each stock sale, while Schedule D aggregates the column totals from this form to report your total long-term and short-term capital gains and losses. However...

UPDATES! What tax statement will I receive from my broker after a sale of company stock I acquired by stock option exercise, restricted stock vesting, or ESPP purchase? This is premium content

You will need to gather certain information to complete your tax return. The broker will send you IRS Form 1099-B for the proceeds...

UPDATES! How have IRS Form 1099-B and cost-basis reporting changed for sales of stock acquired from my stock options, restricted stock, or ESPP? What do I need to do differently because of the changes? This is premium content

If you sold shares during the calendar year, your brokerage firm will issue IRS Form 1099-B by mid-February of the following year. This is an important document that you must have to complete your tax return for the year of sale...

UPDATES! What if the wrong cost basis is reported on my 1099-B? How do I report the right cost basis on Form 8949 of my tax return? This is premium content

The new Form 8949 is where you now list the details of each stock sale on your tax return, while the revised Schedule D is where you now merely aggregate the column totals from Form 8949 to report your total long-term and short-term gains and losses. From our interpretation of the forms and their instructions, myStockOptions.com recommends the following reporting steps to avoid overpaying taxes...

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...

I bought stock in my company's ESPP and am hoping to wait 12 months before selling to get the favorable ESPP tax treatment. What happens in a cash M&A deal when I am trying to reach the one-year holding-period mark but the buyer pays cash for the stock before then? Is there any way around a disqualifying disposition? This is premium content

Assuming you have no power to refuse or delay your stock sale for cash, there is...

Is the gifting or donation of stock that I acquired from an ISO exercise or ESPP purchase a disqualifying disposition? What is the tax treatment for early sale? This is premium content

A disqualifying disposition occurs if you sell, transfer, exchange, gift, or donate the stock that you acquired without...

If I gift stock that has met the holding periods for Section 423 ESPPs, what is the tax treatment? This is premium content

You can gift shares purchased from a qualified Section 423 ESPP after the holding requirements are satisfied without disqualifying consequences. However, you do not completely escape taxation...

If I donate stock that has met the holding periods for Section 423 ESPPs, what is the tax treatment? This is premium content

You can donate shares purchased from a qualified Section 423 ESPP after the holding requirements are satisfied without the disqualifying consequences of a premature transfer. However...

Can my ESPP go underwater or be affected in other ways by a down market? This is premium content

Employee stock purchase plans cannot be "underwater" in the traditional sense of having a purchase price greater than the current stock price. Down markets can create special opportunities and unique issues for ESPPs. For example, with an ESPP...

UPDATES! What is a wash sale? This is premium content

If you sell company shares for a loss and buy more company shares within 30 calendar days before or after the loss transaction, the federal tax code will...

What is the tax treatment of ESPP shares at death? This is premium content

The tax treatment of sales by your estate depends on whether you or the estate purchased the shares. Death is considered a qualifying disposition of the shares, regardless of how long you have held the shares. If you purchase the stock but die before its disposition, you have...

UPDATES! Are my stock grants affected by the rules of deferred compensation under IRC Section 409A? This is premium content

A number of tax law provisions that may affect your stock grants were introduced in the American Jobs Creation Act (AJCA); the final regulations on deferred compensation under IRC Section 409A, which adopt the...

My company's stock is now essentially worthless because of securities fraud by senior executives. Can I claim a casualty or theft loss on my tax return? This is premium content

A casualty or theft loss would allow you to deduct the lost amount against your ordinary income, subject to some limits. However, Treasury regulations and court rulings would probably stand in your way. Nevertheless, what you can do is...

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