<<Annually the company I work for purchases shares of its own stock at the beginning of the year at a
discount. It then distributes these shares to its employees as a bonus at the end of the year at market
value. What is my tax basis in the shares of stock I receive as a bonus? Since it cost me nothing to
receive this stock, would it be considered a capital gain or ordinary income? At what tax rate?>>

As KAT noted, it is not really possible for your employer to "give" you shares of stock. If these shares ARE provided to you, generally the FMV of the shares will be included in your W-2, and you'll get hit with payroll and withholding taxes on the "gift".

Your basis, then, would be the amount that was included in your W-2 for the FMV of the shares. Your holding period would begin on the date that the shares were taken into income by you, and your basis would be the amount that you were required to report as income.

Hope this helps...
TMF Taxes
Roy