When my company eliminates the lookback for my ESPP, will the tax treatment change?
Assuming this is still a tax-qualified ESPP, the tax treatment stays the same, though it gets even more confusing (less intuitive) when you meet the holding period requirements before you sell the stock. If you do not meet the holding period requirements, the ordinary income calculation is based on the spread at purchase, as described in another FAQ on myStockOptions.com. When you do meet the holding period requirements, you still have ordinary income when you sell. The actual discount for the purchase and for tax purposes will often differ. As with an ESPP that has a lookback, the purchase price discount for the taxes is still computed as of the first day of the offering period for a Section 423 ESPP, according to the experts on the advisory board of myStockOptions.com, who have reviewed the US Treasury’s regulations for us. (For details on the amount of ordinary income that is recognized, see the related FAQ.) For guidance on reporting ESPP stock sales on your Schedule D, see the spe
