ESPP 101

Employee Stock Purchase Plans (ESPP) usually gives employee the opportunity to buy company stock at a discount, usually it is 15%.

Two dates to remember:
Grant date (offering date)
Purchase date (exercise date)

Two price to remember for tax purpose:Grant price
Purchase price

Two years to remember for qualified disposition:
2 years since grant date
1 years since purchase date

When the company buys the shares for you, you do not owe any taxes.
When you sell the stock, the discount that you received when you bought the stock is generally considered additional compensation to you, so you have to pay taxes on it as regular income.  The 15% discount applies to the lower price, and the discount amount will be considered ordinary income in sale year's w2 for qualified disposition. (Remember to adjust the cost basis in tax return)

To get favorable long-term capital gains treatment, you have to hold the shares purchased more than one year from the purchase date and more than two years from the grant date.