Staples 2014 Annual Report Download - page 37

APPROVE AN AMENDMENT TO THE 2012 EMPLOYEE STOCK PURCHASE PLAN (ITEM 2 ON THE PROXY CARD)
www.staplesannualmeeting.com STAPLES 33
proceeds and the value of the common stock on the day he
or she purchased the common stock. This capital gain or loss
will be long-term if the participant has held the stock for more
than one year and otherwise will be short-term.
Any compensation income that a participant receives upon
sale of the common stock that he or she purchased under
the 2012 ESPP will not be subject to withholding for income,
medicare and social security taxes, as applicable. Staples is
required to report as ordinary income on a participant’s annual
Form W-2 any compensation income that he or she receives
from selling common stock purchased under the 2012 ESPP.
However, Staples may not always be in a position to ascertain
the amount of a participant’s ordinary income. As a result, it
is the participants’ responsibility to report this income on their
individual income tax return.
Tax Consequences to Participants in the Non-423 Component
A participant will not have income when he or she enrolls in
the 2012 ESPP. A participant will have compensation income
equal to the value of the common stock on the day he or she
purchased the common stock less the purchase price.
When a participant sells the common stock he or she
purchased under the 2012 ESPP, he or she also will have a
capital gain or loss equal to the difference between the sales
proceeds and the value of the common stock on the day he or
she purchased it. This capital gain or loss will be long-term if
the participant held the common stock for more than one year
and otherwise will be short-term.
Any compensation income that a participant receives upon
sale of the common stock that he or she purchased under
the 2012 ESPP is subject to withholding for income, medicare
and social security taxes, as applicable. In addition, the
compensation income is required to be reported as ordinary
income to the participant on his or her annual wage statement,
and the participant is responsible for ensuring that this income
is reported on his or her individual income tax return.
Tax Consequences to Participants in both the 423 and Non-423 Components
The amount that a participant elects to have deducted from his
or her base pay for the purchase of common stock under the
2012 ESPP constitutes compensation income and is subject
to withholding for income, medicare and social security taxes,
as applicable.
Distributions on our common stock will be treated as dividends
to the extent paid from our current earnings and profits. If a
distribution exceeds our current and accumulated earnings
and profits, the excess will be treated as a tax-free return
of a participant’s investment up to his or her tax basis in the
common stock. Any excess will be treated as capital gain
which will be long-term capital gain if the participant held the
common stock for more than one year and otherwise will be
treated as short-term.
If a participant is required to participate in the Staples DRIP, he
or she will receive dividends in the form of our common stock
rather than in cash, however, the participant will be taxed in the
same manner as if he or she had received cash.
Tax Consequences to Staples
There will be no tax consequences to Staples except that
we will be entitled to a deduction when a participant has
compensation income upon a disqualifying disposition for
purchases made under the 423 Component and upon
purchases made under the Non-423 Component. Any such
deduction will be subject to the limitations of Code Section
162(m).
OUR BOARD RECOMMENDS THAT YOU VOTE
FOR THE APPROVAL OF THE AMENDMENT TO
THE 2012 EMPLOYEE STOCK PURCHASE PLAN.