http://efs.fidelity.com/support/sps/article/article2.html it is way more complex than u thought 如果是qualified distribution (hold 2 years), you could have zero ordinary income with capital loss [though capital loss is offset by your 15% discount savings] you will alreays have at least 15% or MORE in ordinary income for disqualify distribition example Stock price on first day of offering period $17 Stock price on last day of offering period (tax basis) $10 Purchase price of the stock $9 Stock price when you sell $24 Qualified distribution: ur oridinary income: 17 (price on first day)-9=8$ long-term capital gain: 24-17=7$ disqualifed distribution: ur ordinary income: 10 (price on last day)-9=1$ (long or short term)capital gain: 24-10=14$ 尽管两者加起来都一样,但tax不一样 ordinary income subject to FICA tax 7.65% plus income tax short term capital gain treat the same as income but no FICA tax long term capital gain tax is the lowest (0,15%,20%) depending on income so u always want to have ur ordinary income as low as possible