Yes, you must add the matching portion your employer contributed to your basis. Your employer put that in your w2 so you did pay taxes on that extra amount. That bump in your basis decreases your gain.
Taxes on ESPPs are levied when you sell your stock--both as compensation income and as capital gains.
Your employer purchased stock on your behalf and you should have received Form 3922 -- "Transfer of Stock Acquired Through an Employee Stock Purchase Plan Under Section 423(c)". This form is purely informational, but is important for record-keeping.
When you sell the stock, the company will send a 1099-B, as any broker would. Any discount received on the initial purchase or other funds deemed "compensatory" will then be reported as income on your W-2 for that tax year.
That income on your W2 is part of the basis you need to be sure is reported when you enter the 1099-B. It is often not included in the basis listed on the 1099-B. It could be, so be careful and use your form 3922 and w2 to determine your correct basis.
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