Updated July 28, 2026. Quick answer: You need both: two years from the offering date and one year from the purchase date. The two-year clock starts at the beginning of the offering period, not at purchase — which is why it is often satisfied sooner than people assume.
Where the clocks start
| Clock | Starts | Length |
|---|---|---|
| Grant clock | Offering date — start of the offering period | 2 years |
| Purchase clock | Purchase date | 1 year |
On a six-month offering period, the purchase happens eighteen months before the grant clock runs out. So the binding constraint is usually the two-year grant clock, not the one-year purchase clock — the opposite of what most people assume.
Counting from the right date
Your plan documents or plan administrator will state the offering date. It is not the purchase date, not the date you enrolled if that differs, and not the start of the calendar year. Getting this wrong by a few months is the most common way a sale intended to be qualifying turns out not to be.
Both conditions must hold. Satisfying one and missing the other by a day produces a fully disqualifying disposition, taxed on the entire purchase-date spread.
Sources
IRC §423(a)(1); IRC §423(c); Treas. Reg. §1.423-2(a).
This states what the cited authority says. It is not tax advice.