While we accept shares that originated through an ESPP program, there are a few additional considerations for participants. Due to the inherent discounted nature of most ESPP programs, there are two tax liabilities to be aware of – the ordinary income liability on the discounted price, and the capital gains liability on the stock’s appreciation.

When Cache receives shares that originated in an ESPP program, we are only aware of the cost basis of these shares, not the discount factor – i.e. your pre-discount cost basis would be the cost basis of your exchange fund shares.

Upon receiving a redemption from the exchange fund, you would realize the ordinary income liability when you choose to sell. We recommend working with your CPA to ensure precise handling of these sales, and also following up on any reporting obligations you would have on these sales.
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