Yes, the discount you received when purchasing the ESPP shares is typically included as part of your ordinary income and reported in Box 1 of your W-2 for the year of purchase. In your example, the $1,000 discount would be taxed as ordinary income in 2023.
Inn 2033 when you plan on selling the shares, you will only be taxed on the capital gains just as long as this is a "Qualified Disposition". A qualified Disposition is one that:
- You hold the shares for more than one year after the purchase date. and
- You hold the shares for more than two years after the grant date (the start of the offering period).
If it is a "disqualified Disposition", then the discount could be taxed again. More than likely in 2033, this will be a "qualified Disposition".
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