Publication 525 。
These rules impose reporting requirements on a disposition of ESPP shares that occurs after you have held the shares long enough to avoid a disqualifying disposition. Unlike the rules for incentive stock options, these rules may require some or all of your profit to be reported as compensation income even after you've satisfied the holding period requirement. The amount of compensation income is calculated differently than for a disqualifying disposition, using the lesser of two numbers. Strangely, it is possible (although unusual) for the amount of compensation income to be larger for a qualifying disposition than it is for a disqualifying disposition.
The law on this issue is poorly written and causes plenty of confusion among the companies that maintain these plans, the individual participants and their tax preparers. Even the IRS has sometimes appeared to be confused about this rule, stating it incorrectly in Publication 525.
So make sure on your tax:
- don't pay double tax on compensation income (usually the DISCOUNT).
Your compensation income from ESPP shares in a qualifying disposition is the lesser of two amounts (the discount or the profit).
Check your W-2
The compensation income from a qualifying disposition may be reflected on Form W-2 received from the company maintaining the plan. That doesn't always happen, so you should check your W-2. It may be difficult to isolate this amount because it is not listed separately. One clue would be to compare the number in box 1 (your total wages) with the number in box 3 (social security wages), because this income should appear in box 1 but not in box 3. If you're uncertain about whether the company included this amount in your wages reported on form W-2 you should clarify this with the payroll department.
Also check your box 14 of W-2 .
注意啦，TurboTax可不自动给你加的哦！ you need to tell TT whether or no.
- on Sch D, your cost basis = price you actually paid + compensation income. this calculation also applies to ISO, NON-QUAL.A discount is recorded on your W-2 form that should raise cost basis and lower taxes when the stock is sold. But this adjustment is often overlooked.
RSU is an exception, its cost basis is the price you actually paid. For more info on RSU, please see: