A disqualifying disposition means selling your shares within one year after the purchase date or within two years from the beginning of the applicable offering period. A qualified sale means holding your shares for more than one year after the Purchase Date and more than two years from the beginning of the applicable offering period.
Disqualifying disposition
If you sell the shares within one year after the purchase date or within two years from the beginning of the applicable offering period, part of your gain is taxed as ordinary income.
Quicken enters a MiscInc transaction in the investment transaction list, with a category of _ESPP Self Income or _ESPP Spouse Income, for the amount that is ordinary income. Ordinary income is the difference between the price paid for the stock and the market value on the purchase date.
|
Term |
Definition |
|---|---|
|
Bargain element |
(Purchase date fair market value minus discount price) times the number of shares purchased |
|
Capital gain |
Total proceeds minus cost basis |
|
Cost basis |
(Purchase price times number of shares) plus bargain element |
Qualifying disposition
Qualifying sale definitions, if the sale price is greater than the fair market value on the offering date
|
Term |
Definition |
|---|---|
|
Bargain element |
Offer date fair market value times discount percent times number of shares |
|
Capital gain |
Total proceeds minus cost basis |
|
Cost basis |
(Purchase price times number of shares) plus bargain element |
Qualifying sale definitions, if the sale price is less than the offering date fair market value and greater than the discount price
|
Term |
Definition |
|---|---|
|
Bargain element |
(Sale price minus discount price) times the number of shares |
|
Capital gain |
Should always be zero |
|
Cost basis |
(Discount price times number of shares) plus bargain element |
Qualifying sale definitions, if the sale price is less than the discount price
|
Term |
Definition |
|---|---|
|
Bargain element |
Should always be zero |
|
Capital gain |
(Sale price time number of shares) minus cost basis, or total proceeds minus cost basis |
|
Cost basis |
Discount price times number of shares |