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Our plan charges employees 85% of FMV. So it costs us $50.63 per share.
1. My question is do I report all $12.994.56 as income on sched 1040?
2. How do I report this?
3. Where do I report this?

As I understand it, you purchased the 140 shares on 10/29/99 through your employer's Employee Stock Purchase Plan for $7,088.20; the fair market value of the 140 shares on that date was $14,813.40. On 7/12/00 you sold the 140 shares for $12,994.56.

I'm assuming you were still employed by this employer during 2000, and you have received a W-2 from them, and that these were the only ESPP-purchased shares you sold during 2000.

You should have received clear instructions from your employer explaining how you could figure out the income tax implications when you sell shares you obtained via the ESPP. If I were you, I would carefully check what's shown on the 2000 W-2 against my last pay stub for the year. If the amount on line 1 of your W-2 is higher than the total you had received as shown on your final pay stub, and if the difference is $7,225.20 or more, post back here for a follow-up.

Phooley in Phoenix
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