Message Font: Serif | Sans-Serif
No. of Recommendations: 0
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.

Fool On!
Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.