Under Section 423(b), when a participant sells their ESPP shares after two years from the date of grant (offering date) and one year from purchase date, it is categorized as a qualifying disposition.
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Qualified ESPPs, known asQualified Section 423 Plans(to match the tax code), have to follow IRS rules to receive favored treatment. The most significant implication for employees is a $25,000 benefit cap. In the most common setup, employees set aside income (usually at a max of 10 or 15...
This means that you need to track both cost bases because your Regular tax gain is computed differently from your AMT tax gain. This also means that in the year of sale, your AMT cost basis on a qualified disposition (shares held more than one year past exercise) is generally less than ...
ESPPs have two varieties that are determined by how they are treated by the tax code. A nonqualified plan does not receive any special treatment when it comes to taxes. A qualified plan is covered by section 423 of theIRS tax codewhich can qualify your earnings for capital gains instead of...