The ESPP cost basis double-tax trap is what can happen when your broker’s 1099-B document reports your cost basis as your purchase price only — missing the discount your employer already included as ordinary income on your W-2. Without an adjustment, you may pay tax twice on that discount. To fix it, adjust your basis on Form 8949 by adding the ordinary income component. This applies to both qualified and disqualifying dispositions, but it’s typically most valuable to catch on qualified sales.
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