Taxes

Selling stock from your Employee Stock Purchase Plan (ESPP) can lead to very different tax outcomes depending on timing. Here are the core points from the lesson:

• A disqualifying disposition (selling within 1 year of purchase or 2 years of the offering date) results in ordinary income tax on the discount and short-term capital gains on additional profits
• A qualifying disposition (selling after both 1 year from purchase and 2 years from offering) splits the gain into lower-taxed long-term capital gains and a smaller portion of ordinary income
• 1099-B forms often underreport your cost basis, so you may need to correct it using Form 8949 to avoid paying tax twice on the same income

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