# Understanding cost basis for ESPP shares

• On June 1, 2022 company's stock price was 100\$
• On November 30, 2022 company's stock price was 150\$
• On December 1, 2022 company purchased 10 shares for 85\$.
• 15% discount applied to stock's price on June 1,2022.
• On December 15, 2022 I sold these 10 shares for 120\$.

What is the cost basis per share for this sale? 85\$ or 100\$?

• Is this a qualified or non-qualified ESPP? What was the grant date of the ESPP (it could be June 1, 2022, but it might also be earlier)? edit: Actually, the grant date won't matter since it's a disqualifying disposition anyway. Jan 31, 2023 at 21:00
• What income tax were you charged when you received the shares? Jan 31, 2023 at 21:14

If this is a qualified ESPP and,

• Offering start FMV = \$100
• Offering end (aka purchase date) FMV = \$150
• Discount % = 15% (actual purchase price = \$85)
• Sale price = \$120

This is a disqualifying disposition.

The cost basis for capital gains/(losses) is the purchase date FMV = \$150/sh.

The ordinary income component is your purchase date FMV minus your actual purchase price = \$150 - \$85 = \$65/sh.

The capital gains component is your sale price minus your basis = \$120 - \$150 = -\$30/sh.

So for 10 shares, you would recognize ordinary income of \$650 and a short-term capital loss of (\$300).