Ronita sold shares of stock she acquired by exercising options granted to her under an employee stock purchase plan (ESPP). Her employer did not offer the shares at a discount, so the price she paid when she purchased the stock was the fair market value at the time. If Ronita sold the stock for a profit after meeting the holding period requirements, how should the difference between her basis and the sales price be reported on her tax return
1. Compensation income subject to income tax, as well as social security and medicare taxes.
2. Additional ordinary income.
3. Short-term capital gain income.
4. Long-term capital gain income.
