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A disqualifying disposition means selling your shares within one year after the purchase date or within two years from the beginning of the applicable offering period. A qualified sale means holding your shares for more than one year after the Purchase Date and more than two years from the beginning of the applicable offering period.

Disqualifying disposition

If you sell the shares within one year after the purchase date or within two years from the beginning of the applicable offering period, part of your gain is taxed as ordinary income.

Quicken enters a MiscInc transaction in the investment transaction list, with a category of _ESPP Self Income or _ESPP Spouse Income, for the amount that is ordinary income. Ordinary income is the difference between the price paid for the stock and the market value on the purchase date.


TermDefinition
Bargain element(Purchase date fair market value minus discount price) times the number of shares purchased
Capital gainTotal proceeds minus cost basis
Cost basis(Purchase price times number of shares) plus bargain element


Qualifying disposition

Qualifying sale definitions, if the sale price is greater than the fair market value on the offering date

TermDefinition
Bargain elementOffer date fair market value times discount percent times number of shares
Capital gainTotal proceeds minus cost basis
Cost basis(Purchase price times number of shares) plus bargain element

Qualifying sale definitions, if the sale price is less than the offering date fair market value and greater than the discount price