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Level 2
December 7, 2019
Solved

Any tax consequence to employee purchase of company stock and no sale?

  • December 7, 2019
  • 4 replies
  • 33 views

employee purchases employer stock at a discount.  no sale at this time

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Best answer by itonewbie

Not until it is disposed of.  What your client has is probably ESPP or ISO.  In order for the preferential capital gain tax treatment to apply, the stocks acquired must not be sold (in what is called a disqualifying disposition) 2 years from the date of grant or 1 year from the date of exercise, whichever is later.

4 replies

itonewbie
itonewbieAnswer
Level 15
December 7, 2019

Not until it is disposed of.  What your client has is probably ESPP or ISO.  In order for the preferential capital gain tax treatment to apply, the stocks acquired must not be sold (in what is called a disqualifying disposition) 2 years from the date of grant or 1 year from the date of exercise, whichever is later.

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itonewbie
Level 15
December 7, 2019
In the past, you'd have to be mindful about AMT upon exercise but probably less so going forward.
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