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I have shares acquired through an American company I was working for. They were purchased through the company ESPP plan. I was living and being paid in Europe at the time ( I am not a US citizen). 10 years later I have moved to the US full time and will be shortly selling these shares. Am I liable for US ordinary income tax on these shares, even though they were acquired while not a US tax payer?

  • Thanks for the info. I knew I was going to have to pay CGT when I sell the shares, but the ordinary income tax obligation was a mystery. Selling the shares before moving wasn't really an option as the share price was very low. – Kelvin Jan 23 '15 at 22:00
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Am I liable for US ordinary income tax on these shares, even though they were acquired while not a US tax payer?

No, you're not liable for the US ordinary income tax.

If you are a US tax resident already, you are liable for the US capital gains tax.

Since the holding period was more than 1 year, that means preferential tax rates, but you're still going to pay taxes on your gains on these stocks even though they were acquired when you weren't a US tax resident. To avoid that, you should have discarded them before moving (and maybe bought back if you wanted to continue holding them).

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