Tax Tips |
Fringe Benefits - Employee Stock Purchase Plans
Options granted under an employee stock purchase plan let employees buy company stock at a discount, often 15 percent below market value. You don't have to report any income until you sell the stock, when you are taxed on the difference between what you paid and what you get. The discount is taxed as ordinary income, and if you meet certain requirements, the remainder of your income is taxed as long-term capital gain.