Reporting rules changed over time. You will need to report the W2 and be sure that basis is included in the 1099-B. Sometimes it is included. Your basis in the stock is the amount you paid plus the discount you received. If not, adjust the basis in the program. If you hold the stock, you will have capital gain rather than ordinary income, which is more favorable.
The rules for qualifying statutory stock options (ISO and ESPP) are:
- One year after the stock was transferred to the taxpayer or
- Two years after the option was granted
To simplify, you bought stock for $85 that should have cost $100. You hold it and sell as a capital gain later for $200. This is a much better deal than if your company just gave you a $15 bonus occasionally. It benefits both of you to be invested in the company stock.
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