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Financial Planning / Tax Strategies

URL:  http://boards.fool.com/i-dont-have-the-tax-code-or-my-tax-book-handy-15941515.aspx

Subject:  Re: ESPP Spreadsheet Date:  10/17/2001  12:11 PM
Author:  FoolStreet Number:  54670 of 121572

I don't have the tax code or my tax book handy, but the gist is as follows:

Unless you hold the stock for 2 years past the initial grant date (which is occurs 6 months for me), then no matter what, you have to pay income tax on the market price on the day of purchase less the purchase price, *even* if the sales price is lower than the market price the day you purchased the stock. The only consolation in this case is that since you are paying tax on the difference between Purchase and Market prices, the market price now becomes your stock basis. So if you do sell it at a price lower than the market price the day you bought it, then you can claim a capital loss and get some $ back...

This all assumes that you are getting some discount from your corporation to buy stock at a discount. The IRS figures if your employer is giving you this benefit, you should pay income tax on the benefit.

Anyway, that's the way I understand all this. If it's not clear, let me know and I'll try again. On the other hand, there are some smart cookies on this board, so if it sounds like I have it wrong, please let me know.

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