Have ESPP rules changed?

September 21, 2011

Subject:   ESPP
Date:   Wed, 10 Dec 2008
From:   Tina

I saw your article, “Employee Stock Purchase Plans Compared To Incentive Stock Options.”

Are these rules still in effect, or has the tax law changed?

I am consider selling my ESPP shares immediately after exercise and collecting the 15% gain.

I want to use the money for a downpayment on a home.

Thanks so much! Tina


Date:   9 Jan 2009

Hello Tina,

Yes. The basic rules are the same. The 15% discount will be taxed as additional wages, and added to your cost of the stock. Any difference between the net selling price of the stock and the cost (including the 15% income) will be a short-term capital gain or loss and should be very small.

Good luck!

Mike Gray

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