What is the difference between "423b Qualified Shares" and "423b Subject to Disqualification" ?

This is in regards to an Employee Stock Purchase Plan.
Answer:    Section 423 of the Internal Revenue Code (first link below) deals with employee stock purchase plans (ESPPs). A "qualified 423 plan" is one that meets the requirements of Section 423.

In English, such a plan allows employees to purchase shares at a discount without owing any taxes on the discount at the time of purchase. As long as the shares are not sold within the required holding period (within 1 year after the shares were transferred to you or within 2 years after the option was granted), then the sale of the shares merely creates capital gain. This is your "423b Qualified Shares."

However, if you sell the shares BEFORE the required holding period is met, then the shares are disqualified, and the discounted purchase price of the shares gets taxed as ordinary income. I would guess that wherever you are reading "Subject to Disqualification," it just means that the shares have not yet met the holding period requirements.

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