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Old 06-11-2021, 05:31 PM   #61
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+ 100

I held on to all ESPP shares long term. I sold a small portion a couple of times, and tax calculation is quite challenging. I have a spreadsheet to do that. Each time, I have to review the requirements and the formula to make sure I do it right. Charles Schwab has an article about how the calculation works.
It wonít matter with 0% tax right?
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Old 06-11-2021, 05:45 PM   #62
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It wonít matter with 0% tax right?
True if you can keep your income and capital gain low enough. With my gain and RMD later on, I will for sure pay 15% capital gain tax on those.
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Old 06-11-2021, 05:49 PM   #63
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True if you can keep your income and capital gain low enough. With my gain and RMD later on, I will for sure pay 15% capital gain tax on those.
RMD from ESPP?
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Old 06-11-2021, 05:53 PM   #64
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Originally Posted by fh2000 View Post
+ 100

I held on to all ESPP shares long term. I sold a small portion a couple of times, and tax calculation is quite challenging. I have a spreadsheet to do that. Each time, I have to review the requirements and the formula to make sure I do it right. Charles Schwab has an article about how the calculation works.
Thatís where a good CPA is worth it.
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Old 06-11-2021, 05:56 PM   #65
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Thatís where a good CPA is worth it.
What would they charge for something like this?
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Old 06-11-2021, 06:56 PM   #66
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Sounds good. I have got stuck paying taxes on the 15% discount because I sold my ESPP shares before the 24 month period that my MC requires.

Wish my company was like yours.
However long you hold the shares, there will always be some ordinary income when you sell them. It will be less if you hold the stock 2 years from the offering date, but it won't be $0.
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Old 06-11-2021, 07:09 PM   #67
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However long you hold the shares, there will always be some ordinary income when you sell them. It will be less if you hold the stock 2 years from the offering date, but it won't be $0.
$0 if certain AGI or under.
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Old 06-11-2021, 07:15 PM   #68
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I had the exact same plan as the OP, except we had to hold shares for 2 years.
Still haven't sold any of them.

Enrolled in January 1995. Later that year, the CEO decided he wanted to be the biggest in the sector at any price & acquired a large European company.

Turned out to be a disastrous move. By 2001, there was talk of chapter 11.
Luckily for me that never happened. The CEO 'stepped down' a competent replacement was found, & things are going well
Even reinstated the dividend that was a eliminated sometime in 2001.

Now that I don't have to worry about the income cliff related to healthcare insurance, I might start taking some profits.

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Old 06-11-2021, 07:20 PM   #69
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I had the exact same plan as the OP, except we had to hold shares for 2 years.
Still haven't sold any of them.

Enrolled in January 1995. Later that year, the CEO decided he wanted to be the biggest in the sector at any price & acquired a large European company.

Turned out to be a disastrous move. By 2001, there was talk of chapter 11.
Luckily for me that never happened. The CEO 'stepped down' a competent replacement was found, & things are going well
Even reinstated the dividend that was a eliminated sometime in 2001.

Now that I don't have to worry about the income cliff related to healthcare insurance, I might start taking some profits.

Did the stock recover after 2001?
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Old 06-11-2021, 07:26 PM   #70
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$0 if certain AGI or under.
No, you still always have ordinary income when you sell your ESPP shares; it's just that it's not taxed if all your ordinary income is less than your standard or itemized deductions.
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Old 06-11-2021, 07:31 PM   #71
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No, you still always have ordinary income when you sell your ESPP shares; it's just that it's not taxed if all your ordinary income is less than your standard or itemized deductions.
What if you sell after 2 years?
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Old 06-11-2021, 07:46 PM   #72
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Again? Really?

OK, I'll say it again:
Why do you think there is a correct answer to this question? What do you think you should do?
F.I.R.E User,
Larry Bud Melman has asked the $64K question. Asking whether you should hold or sell an individual stock is personal. We donít know who you work for, so itís impossible to answer. Macyís? Microsoft? GE? GameStop? Delta? American Airlines? McDonalds?
From your answers herein, Iíd say youíre not comfortable holding individual stocks, so thereís that. You said itís 1% of your portfolio. Well, if you were all invested in S&P500, 5.5% of your port would be in Apple. So 1% is not high.
Do you want to hold your company for the long term?
Will it be above average, like better than VTSAX?
Will it be around for the long term? Is it being disrupted, or maybe just losing market share? Is it kickin butt and takin names?
Do you want to own ANY individual stocks?
Individual stock ownership is only high risk because of owner behavior. Can you hold an good company through a downturn? Will you sell a BIG winner too early because you made 30% profit and lose 500% later?

Thereís a lot to think about, and it comes down to the quality of the company you work for, itís stock price, your asset allocation and your behavior as a stock holder.
I still hold some ESPP shares from 2013. They are up like 600% and my highest yielder. Iím fortunate to have worked for a company with above average prospects. Not all can say that.
Itís up to you to think it over
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Old 06-11-2021, 08:17 PM   #73
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What if you sell after 2 years?
See post #27 in this thread where I explained how to calculate ordinary income depending on whether you held the stock for more or less than 2 years from the offer date.
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Old 06-11-2021, 08:27 PM   #74
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F.I.R.E User,
Larry Bud Melman has asked the $64K question. Asking whether you should hold or sell an individual stock is personal. We donít know who you work for, so itís impossible to answer. Macyís? Microsoft? GE? GameStop? Delta? American Airlines? McDonalds?
From your answers herein, Iíd say youíre not comfortable holding individual stocks, so thereís that. You said itís 1% of your portfolio. Well, if you were all invested in S&P500, 5.5% of your port would be in Apple. So 1% is not high.
Do you want to hold your company for the long term?
Will it be above average, like better than VTSAX?
Will it be around for the long term? Is it being disrupted, or maybe just losing market share? Is it kickin butt and takin names?
Do you want to own ANY individual stocks?
Individual stock ownership is only high risk because of owner behavior. Can you hold an good company through a downturn? Will you sell a BIG winner too early because you made 30% profit and lose 500% later?

Thereís a lot to think about, and it comes down to the quality of the company you work for, itís stock price, your asset allocation and your behavior as a stock holder.
I still hold some ESPP shares from 2013. They are up like 600% and my highest yielder. Iím fortunate to have worked for a company with above average prospects. Not all can say that.
Itís up to you to think it over
I am going with majority here. Sell the shares when eligible on long term capital gains and then invest in index funds in my Roth IRA/Taxable account.

Only reason I invested is because of 15% discount per share.
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Old 06-11-2021, 08:27 PM   #75
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See post #27 in this thread where I explained how to calculate ordinary income depending on whether you held the stock for more or less than 2 years from the offer date.
Got it.
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Old 06-13-2021, 09:13 PM   #76
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However long you hold the shares, there will always be some ordinary income when you sell them. It will be less if you hold the stock 2 years from the offering date, but it won't be $0.

Just to clarify: My Mega Corp lets me buy ESPP shares at a 15% discount + the capital gains. If I turn around and sell those shares in less than 24 months, I have to pay ordinary tax on the 15% discount. If I sell after 24 months, I only pay tax on the capital gains.
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Old 06-13-2021, 09:23 PM   #77
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Just to clarify: My Mega Corp lets me buy ESPP shares at a 15% discount + the capital gains. If I turn around and sell those shares in less than 24 months, I have to pay ordinary tax on the 15% discount. If I sell after 24 months, I only pay tax on the capital gains.
Makes sense.
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Old 06-13-2021, 10:57 PM   #78
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Did the stock recover after 2001?
Maybe you're just being sarcastic ?
Maybe there's something wrong with your phone/laptop/desktop & you're unable to see the chart I included ?

Yes, the stock recovered very nicely. Sometime in 2001, it briefly traded below $1.00, now it's at $100.00
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Old 06-13-2021, 10:58 PM   #79
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Yes. Sometime in 2001, it briefly traded below $1.00, now it's at $100.00
I included a chart. Aren't you able to see it ?
Nice.
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Old 06-14-2021, 07:06 AM   #80
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Just to clarify: My Mega Corp lets me buy ESPP shares at a 15% discount + the capital gains. If I turn around and sell those shares in less than 24 months, I have to pay ordinary tax on the 15% discount. If I sell after 24 months, I only pay tax on the capital gains.

What I meant to say here is: My Mega Corp lets me buy ESPP shares at a 15% discount. If I turn around and sell those shares in less than 24 months, I have to pay ordinary tax on the 15% discount + any capital gains. If I sell after 24 months, I only pay tax on the capital gains.
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