When you sell stock acquired with an option granted under an employee stock purchase plan, the tax results depend on:
If the option price was below the stock's fair market value at the time the option was granted, this difference is wage income, which your employer should have included on your W-2.
If you held the stock for a year or less, or if you sold the stock two years or less after the option was granted, the difference between the fair market value of the stock at the time you exercised the option and the option price is wage income. Your employer should have included that difference on your W-2.
To avoid being taxed twice on wage income related to the sale, here's what to do. When you enter the stock sale in the Capital Gains and Losses Interview or on the Capital Gains and Losses Worksheet, we'll ask for your "cost," or basis in the stock. Be sure to include in the "cost" any compensation your employer reported on your W-2 related to the sale.
For more information, see IRS Publication 525.