"I participate in my company's stock purchase plan ESPP at a 10% discount. purchases are made quarterly. My company has been adding the 10% discounted amount onto my payroll quarterly and taxing it. I have not sold any shares. Is that correct?"

  • 1
    please specify your country. Mar 24, 2016 at 23:03

1 Answer 1


Since you're being taxed at purchase, it sounds like this is a non-qualified ESPP. Under those rules, the 10% discount is taxed like regular income (including Social Security and Medicare taxes). More details under the 'Tax Calculation' section on this page. There will be tax consequences again when you sell, either a capital gain or loss with the cost basis being the fair market value at purchase (i.e. the price before the discount).

  • Thanks for clarifying. I appreciate you taking the time
    – Sheryl
    Mar 26, 2016 at 12:30

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