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My wife used to work at Oracle and quit in January 2016. While she was there, she bought Oracle stock under an ESPP (employee stock purchase plan) that allowed her to buy the stock at a discount.

In 2017, she sold this Oracle stock.

Oracle issued her a W-2 for 2017. We asked them why and they said it related to the sale of this stock.

Is this a mistake by Oracle? It seems that any taxable income from Oracle would have been at the time she purchased the stock, and it seems that selling the stock would not be any W-2 income.

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It is not a mistake. The stock was sold quickly enough to be considered a disqualifying disposition, so the ESPP discount is considered income. The amount reflected on the W-2 should be the amount saved via the ESPP discount. See the TurboTax article Employee Stock Purchase Plans for more details.

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  • +1 for good answer. Sources are great, but better to include the actual title, than just a generic "source".
    – JTP - Apologise to Monica ♦
    Feb 16, 2018 at 15:49
  • Thanks, had no idea that taxation for ESPP was so complicated!!!
    – new name
    Feb 16, 2018 at 16:19

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