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March 6, 2024
Question

ESPP taxation

  • March 6, 2024
  • 1 reply
  • 0 views

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?

 

1 reply

March 6, 2024

If he shows earned income then he can use it to base Roth contributions on, yes.  

 

His unearned income will trigger a different tax rate if it's high enough, though.  Read about the kiddie tax here.

 

@000000000000 

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