I participated in my company's ESPP program for several years. I purchased the stock and held it for over 2 years making it a qualified disposition.
After that the company's stock tanked and I sold the shares at a loss for less than the original purchase price. I received a W2 from the company for the bargain element I received as part of the ESPP program. I read in various places that if the sale is a qualifying disposition and you sell for less than the purchase price then you do not have to report the bargain element as ordinary income.
Can someone tell me if this is true or not? I'm concerned that my past employer reported the income on a W2 so now I have to report it even if I may not have to.
For example:
- Purchase 100 shares of ABC stock as part of ESPP program
- Current share price at time of purchase was $100
- Discounted price was $85 at purchase ($15 bargain element)
- Sold shares over 2 years later for $50 a share
- I've reported the capital loss of $35 per share
- Do I need to report the $15 per share bargain element if I sold for a loss on a qualified disposition?
