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EquityDue

See the tax bill hiding in your RSUs before it lands.

ESPP qualifying vs disqualifying disposition

The same ESPP shares can produce different ordinary/capital splits depending on how long you hold after purchase and offering dates.

Why holding periods exist

Employee stock purchase plans under IRC section 423-style rules use holding periods to police preferential capital treatment. Miss them and more income is ordinary.

What to read before you sell

Plan prospectus: offering date, purchase date, discount formula, and the exact holding period tests. Broker “ESPP” labels are not a substitute for the PDF.

How our sketch tool helps

It lets you apply different ordinary vs LTCG rates to a bargain element and extra gain so you see sensitivity — not a determination letter.

General information, not personalized advice.

Common questions

What is a qualifying disposition?
A sale that meets the plan’s statutory holding periods so more of the gain may receive capital treatment — details depend on IRC and plan documents.
What is disqualifying?
Selling before those periods; more of the bargain element is often ordinary income.
Is the discount always ordinary?
Treatment depends on disposition type and plan. Read the plan prospectus; do not rely on a blog table alone.
Can EquityDue decide for me?
No. Our compare tool is a simplified tax-rate sketch for sensitivity, not a filing engine.
Advice?
Educational only.
ESPP Qualifying vs Disqualifying Disposition by EquityDue ↗