ESPPs › Taxes Advanced

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.

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.

Form 8949 and Sch. D diagrams! If you sold shares in 2022 that you acquired from equity compensation or an ESPP, you will need to report the sale on the federal tax return that you file in 2023. 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.

Video included! 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.

Learn the rules for reporting stock sales on your tax return, along with costly errors to avoid if the shares you sold came from stock options, restricted stock/RSUs, stock appreciation rights, or an employee stock purchase plan. Among other issues, you must understand your "cost basis" to avoid overpaying your taxes. Running time: 8:05.

Podcast included! 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.

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...

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 by January 31 of the year following the tax year. The form contains information about your purchases in your company's tax-qualified ESPP during the tax year. With this reporting, the IRS now knows more information about your ESPP purchases than it did before, particularly with regard to your...

The tax treatment stays the same even with no lookback, though it gets even more confusing...

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...

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

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

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 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...

Form 1099-B or the equivalent substitute statement is necessary for the accurate completion of your tax return. Five facts you must know about this reporting to avoid tax-return mistakes are...

Major changes have occurred in tax-return reporting in recent years, making accurate tax-return reporting more complex and difficult...

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...

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...

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

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

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

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

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...

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...

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...

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...

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...

A number of tax law provisions and interpretations that may affect your stock grants occur in...

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...