What’s the official purchase date for ESPP stock?

Sep 6, 2018 20 Comments

Period start, period end, or some other date in between?

I’m asking this to know when my ESPP shares turn into long term capital gains for taxation purposes.

I’m more specifically interested in how does this work at Apple, but I guess this works similarly across companies.


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TOP 20 Comments
  • LeanTaaS uChillBro
    Unlike a 401(k), your contributions to the ESPP are taxed at ordinary income rates. If you hold your shares for more than a year after the purchase date AND more than two years after the beginning of the offering period then any profit above the gain from the discount will be taxed at capital gains tax rates.
    Sep 6, 2018 15
    • Apple eguy61
      But the you pay income rate on the discount... why not just wait it out anyway?
      Sep 7, 2018
    • LinkedIn Q0sienwozu
      The discount is ALWAYS taxed as income. Doesn't matter how long you hold it. The only part that qualifies for long term capital gains is the gains AFTER it's purchased.
      Sep 8, 2018
  • Microsoft Put..in..
    I was told by fidelity that if i sell the espp stock before the 2 year mark, i could be taxed more than what i would have gotten taxed if it were short term gains. Did i get that right?
    Sep 6, 2018 1
    • VMware / Eng

      VMware Eng

      Sounds wrong, short term gains tax is just your income tax
      Sep 7, 2018
  • Read this - https://blog.visor.com/equity/employee-stock-purchase-plans-taxes/ - and mind the terms ‘grant date’ and ‘exercise date’. For example, you get the grant date price of $200 six months prior and the exercise date price of $250. With discount your basis is $170 and you have *at least* $30 of compensation income (unless you sell below $200). If you sell immediately, you have a full $80 of compensation income (taxed at ordinary rates). If you wait 2 years from grant date (1.5 years from exercise), you have $30 of ordinary income and $50+ of long term capital gains, as long as the price doesn’t go down. (The only downsides are that you have to wait, you are pushing some ordinary income into later years, and that the price could move against you.)
    Sep 7, 2018 0
  • Pinterest JEJM77
    In my old company, ESPP purchase dates were usually 2-3 business days after period close.
    Sep 6, 2018 0


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