Stock Price:

o$2.00 per share when she starts at the company (1/1/15)

o$3.00 per share 1 year later (when her first bonus is calculated).

o$5.00 per share 2 years after starting (when first bonus shares vest)

ESPP is available for employees

oPlan period is 1/1 - 12/31

o15% discount off lower price at beginning or end date of the period

a.What is the tax treatment if she holds the stock until the company goes public (5 years later) and sells some shares at $12 a share that she purchased at the end of the first ESPP period?

b.If she leaves the company 6 months after getting the ESPP stock and sells them back to the company at a price of $3.50 per share - what would the tax treatment be to her?