When I sell ESPP shares, part of the gain is treated as earned income rather than long term capital gain. I gifted my ESPP shares (older than 2 years) to my son. When he sells these, does he realize earned income? Can he contribute this income to Roth IRA, for example, (contributions require earned income)? Anyway, it would be weird to state that my 1 year old son got earned income, wouldn't it?