ESPPs: Taxes

Fundamentals Of Employee Stock Purchase Plans (Part 3): Tax Treatment Of Your Purchases And Sales

Alisa Baker
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.

Avoid Tax Return Mistakes With Stock Options & ESPPs: What You Need To Know In 2010

Bruce Brumberg and Lynnette Khalfani
Tax returns can be onerous. Read this article if you are puzzled by Form 1099-B or don't know how and where to report sales of company stock from options or employee stock purchase plans.

ESPP Choices: Flip Or Hold? (Part 1)

Timothy A. Farmer and Gregory G. Geisler
After you decide to participate in your company's employee stock purchase plan, your next decision is whether to sell the stock soon after purchase or to hold it (and for how long). This article series examines different ways to participate in your ESPP according to relative risk tolerance, timeframe, and needs for money.

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What are the eventual tax consequences of participating in a tax-qualified 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...

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?

"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 ESPP has no discount apart from my company's elimination of any fees, such as the broker's commission. Is this taxable?

The company's handling of any commission or other fees is not...

How long must I hold shares purchased under a Section 423 ESPP to receive favorable tax treatment?

To get favorable long-term capital gains treatment...

UPDATED! 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?

You will need to gather certain information to complete Schedule D of your tax return. The broker will send you a Form 1099-B for the proceeds that you use to...

Do I have to pay tax when stock is purchased for me under the plan?

If it's a Section 423 ESPP, no. Although you will acquire stock at a discount from its fair market value...

Are taxes withheld from the spread when you buy stock under a tax-qualified employee stock purchase plan?

The IRS wanted to require withholding, but the American Jobs Creation Act specifically excludes...

Will my company withhold taxes at the sale of stock that I purchased under my employee stock purchase plan?

In these situations most employers do not...

Did Congress or the IRS change the withholding rules that apply to ISOs and ESPPs?

Fortunately, the American Jobs Creation Act of 2004 specifically...

Does the alternative minimum tax (AMT) apply to the ESPP discount spread?

In stock compensation, the AMT is a factor only with...

Are pre- or post-tax dollars used to purchase the stock in the ESPP? Is the salary used to purchase stock still included in my income?

The amount withheld consists of...

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

A disqualifying disposition occurs when you sell or otherwise...

Is transferring ESPP stock into a joint account with my spouse a disqualifying disposition if the stock has not met the holding-period requirements?

No. Similarly, the transfer of share certificates into a brokerage account to be held in street name would not be a disposition...

In a divorce agreement, how is my ESPP treated? Is transferring to my former spouse ESPP stock that has not met the holding period a disqualifying disposition?

ESPPs almost never allow the option/purchase rights to be transferred during...

Do the holding-period requirements apply to my ESPP stock after I leave the company?

These tax rules do not depend on...

Can I use ESPP shares in a stock-swap exercise of my options?

Yes, if your company allows it. When you use your ESPP shares as currency for exercising options, you receive both replacement shares equal to the number you exchanged and the profit shares...

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