Massachusetts resource income for non residents

[KXBG4746]

Is disqualifying disposition from ESPP taxable for non Massachusetts residents? In another word, is disqualifying disposition derived from ESPP stock sales considered Massachusetts resource income?

[MaryK4 · Accepted solution]

If you worked in Massachusetts when you made the ESPP purchased or qualified for the purchased, it most likely is Massachusetts income.

[KXBG4746]

Thanks for your reply. For non-resident and work outside of Massachusetts (remote work for Mass company), is disqualified disposition from ESPP Massachusetts income?

[MarilynG1 · Accepted solution]

Yes, any income derived from Massachusetts sources would be considered 'MA source income' and reported on a Non-Resident return.  If you sold employee stock from a MA employer and received a 1099-B, any capital gain/loss would be reported on your non-resident return.  Here's more info from MA Dept. of Revenue.

For a 'disqualifying disposition', add the amount from your W-2 (may be in Box 14) to the cost of the shares to get your correct Cost Basis.  You can then enter the 1099-B as a regular stock sale (not employee stock).

Here's more detailed info on Employee Stock Purchase Plans.

@KXBG4746 

[KXBG4746]

Great help, Thanks.

For most states, sale of stock and receipt of interest and dividends are not state income for non-resident who works outside of that state. But the disqualified disposition of incentive stock option and ESPP is Massachusetts resource income for non-resident.