r2i forum

Hi, can ESPP (employee stock purchase plan) gains be used to offset stock investment losses? ESPP gains typically get reported in the W2 like ordinary income. But they are technically like short-term capital gains. If so, can they be used to offset short-term capital losses from other transactions?

I'm in a situation where I've more than $3000 in short term losses and I'm unable to offset all of it with ESPP gain because ESPP gain was reported in the W2.

Can it be done?

Thanks.

I use turbo tax premium to file my taxes. I offset the ESPP gains/losses with other stock transactions.

You need to enter the ESPP transactions as Stock Sales of Type ESPP (even though it is reported in your W2)

After you complete the ESPP Stock transaction details, Turbo tax will prompt you with the calculation of how much was reported in W2 and you need to confirm the amounts.

The discount portion of the ESPP has to be reported as ordinary income (and not capital gains) and is the reason why your employer included it in your W2. Difference between your selling price and fair market value on the date of purchase is treated as capital gains/losses.

govikes;274000Hi, can ESPP (employee stock purchase plan) gains be used to offset stock investment losses? ESPP gains typically get reported in the W2 like ordinary income. But they are technically like short-term capital gains. If so, can they be used to offset short-term capital losses from other transactions?

I'm in a situation where I've more than $3000 in short term losses and I'm unable to offset all of it with ESPP gain because ESPP gain was reported in the W2.

Can it be done?

Thanks.

thanks guy. I get it. bottom line is that if the $ was reported in W2, it is the discount portion of the ESPP and cannot be offset with capital loss.

Usually, the stock options gain are reported in W2 and not ESPP. I have been selling ESPP shares via ETrade for the last 5 years and they never withhold taxes for ESPP. They send 1099-B that will report the gains and you have to pay the taxes during the tax return. ESPP gain can be offset with long term or short term losses and I have been doing this for last couple years. When selling stock options, there are 3 types. "Non qualified", "Restricted" and "ISO" or "Incentive Stock options". Incentive options are treated as capital gains and can be used to offset the losses.
Usually, companies don't give ISO for everyone since they take more expenses in giving them.

Sometimes, people don't understand the differences and pay more taxes than required. Do proper due diligence and google before coming to a conclusion.