ESPP and TAX

In previous post I mentioned that ESPP is a great way of safe investing if you don't get greedy however by taking some risk and keeping the stock for long time (usually a year) then you can take advantage of some tax write off and gain more. But please keep in mind that this all depends on stock market.
In this post I have tried to illustrate how IRS wants you to report cost, W2 income and Capital gain/loss. In the diagrams it is assumed that purchasing price is 5% below of the minimum price of stock at offering date and purchasing date.
Left-UP Diagram: Since the stock price at offer date is less than purchase date, then the purchasing price is 5% below offer date however the W2 income should be reported as the difference between the current market value and the purchasing price. And since the stocks have not been kept enough at the selling time the short term capital gain is considered as an income which is the same as W2 income at this time.
Right-UP Diagram: The same as previous diagram, the purchasing price is 5% below offer date however the W2 income is less than previous case as in Qualifying Disposition (keeping stock for a long time) the W2 income is the minimum of current market value and offer date price minus purchasing price. Also long term capital gain should be reported as income when selling the stock.

Cheers,
HTP