The company I work for has an Employee Stock Purchase Plan (ESPP) which allows me to purcase company stock at 15% below market value. These stocks are held in a Smith Barney brokerage account. There are three ways to recieve these stocks. I can have the certificates themselves issued to me for a service charge, I can have the stocks sold on the open market for commission and fees, or I can have the stocks electronically transferred into another account free of charge. It is my understanding that if I sell the stocks before I have owned them for two years I will be subject to additional short term capitol gains taxes. What I would like to do is set up a traditional IRA with a discount brokerage and have the stocks electronically transferred into that account which would cost me nothing. I have 3 questions concerning this. Can I transfer stocks directly into an IRA or do I have to sell them first and transfer the cash into the account? If I can transfer the stocks directly into the IRA do I claim their current market value as my IRA contribution for the year or do I claim the amount I actually paid for the stocks as my IRA contribution for the year? Finally, once I have transferred the stocks into the IRA (assuming this is allowed) I would like to sell them in order to diversify my holdings. Would a sale within the context of an IRA be subject to the short term capital gains tax somewhere down the road?