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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.

ESPPs: Taxes Advanced

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Listen to our podcast on the basics, or watch our videos on the core concepts and benefits, important rules, and tax issues for ESPPs.

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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.

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.

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

Tom Davison and William Whitaker
Notable shifts in tax rates have occurred for people with high incomes. Part 1 surveys these 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.

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 season has the potential to be more confusing than most if you sold stock in 2014. This article explains common errors to avoid when reporting stock sales on your tax return and provides helpful guidance on various other tax topics involving stock options and ESPPs.

How To Report Sales Of Company Stock On Your Tax Return

myStockOptions Editorial Team
If you sold in 2014 any shares that you acquired from equity compensation or an ESPP, you will need to report the sale on your federal tax return. Learn here what you must know to avoid expensive mistakes and unwanted IRS attention. Our annotated diagrams of Form 8949 and Schedule D can help you make sense of the reporting rules.

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.

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

myStockOptions Editorial Team
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.

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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...

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...

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...

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...

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...

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...

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?

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...

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

From our interpretation of the forms and their instructions, recommends the following reporting steps to avoid overpaying taxes...

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...

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...

What if my company is acquired while I am trying to meet the one-year holding period for ESPP shares but the buyer pays cash for the stock before the holding period is over? Is there any way to avoid a disqualifying disposition? This is premium content

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

What is the tax treatment of my ESPP stock in an acquisition? This is premium content

This depends on how your company's stock is treated under the terms of the acquisition or merger...

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 volatile stock prices? 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. With an ESPP, the market price at the beginning of an offering does not...

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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