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ESPP Help on tax implications and advice
Old 01-11-2011, 07:37 AM   #1
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ESPP Help on tax implications and advice

Forgive me if I struggle to phrase this properly but I was hoping to get a bit of help on what the implications are when selling the stock from my employee stock purchase program. Meaning I vaguely recall that there are penalties if you dont hold it a certain amount of time but I could use a bit of direction either explicitly or some links or maybe even search terms to look up myself. My efforts have been a bit confusing.

Quick Details:

- My ESPP which gives me a 15% discount on the buy.
- I have stock dating back from 7/09 through 12/10 in quarterly increments.
- Unrealized gains from them all total a bit over 8,000.00 and the total amount is around 20,000.00 depending on what the shares are at currently obviously.

This money was going to be used for a new car, I expressly set it aside for that purpose ahead of time as a sort of forced savings but now I am questioning the wisdom of cashing it all out. I am wondering how to weigh the option of cashing out and having to finance very little to nothing on the car, or keep it where it is and finance more on the new car.

Any thoughts would be appreciated.

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Old 01-11-2011, 07:45 AM   #2
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There are no problems with selling shares out of an ESPP... at least not from the gvmt...

However, the rules of your ESPP can prevent you from buying any new shares for a period of time... in my mega, you signed up at the beginning of the year... if you sold any shares, your election was stopped and you could not sign up until the next year...

If you sell shares you just purchased... you have ST cap gain if you have a gain...

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Old 01-11-2011, 08:12 AM   #3
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Here is some information:

Dispositions of ESPP Stock

In my case, to avoid the disqualifying disposition of my ESPP shares, I had to wait at least 2 years after the grant date (roughly 18 months after the purchase date) to dispose of the shares.
42 y/o, married, retirement portfolio = 43 x annual expenses
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