3 ms·

I agree with what you are saying about not having too many eggs in a basket. I have seen many variations on ESPP: 1) You can buy the stock at market value on s

I agree with what you are saying about not having too many eggs in a basket. I have seen many variations on ESPP: 1) You can buy the stock at market value on some set date by paycheck deductions (but you avoid that commision!). Worthless, not work doing IMHO. 2) You contribute up to N% of your salary at M% discount on the stock. I would do this and sell immediatley. There was a small risk associated with that of a big market movement, but in my case M was 15%, so that made me feel comfortable. It worked out to some free money. 3) There was a 6-month window. The company took the lower of the prices at the start of the window or end of the window AND applied a discount. That was awesome. A big rise in 6 months led to big gains. If the stock was tanking, you still got the discount. I would still sell immediately.

logfromblammo 10y ago
Last time I checked, the (US) tax rules stated that if you sold ESPP shares or exercised employee options grant shares before a year had elapsed, the gain was to be reported as ordinary income on your W-2 and taxed accordingly. So you might as well send 28% of the sale to the IRS immediately, to avoid trouble later on. Anecdotally, I once sold some shares/options, so the same gain was reported in my W-2, again on the 1099 from the brokerage, and apparently one more time from my consumer bank when I transferred the funds from the brokerage using a printed check. The IRS said "Screw your return. We're changing it, because you had additional income you didn't report. Pay up, Buttercup." Well, that "additional income" was actually the same pile of cash, photographed at different times from three different angles. It took 10 years and way too many hours of writing FOIA requests and explanatory letters to sort out. The outcome was not what I would ever consider fair, but as I no longer need to fight it any more, I'm content to write off my losses as an educational expense. Your experience with an ESPP is about 99% likely to be better than mine. But before you take the free peanut butter, take a quick look around for any levers connected to a gigantic spring. Poke it with an 11-foot pole a few times. It's but one of the several reasons why I mentally model the US government as neckless slab of meat that is 7'6", 400#, and a crack shot with an infantry rifle, yet with the ethics of a 4-year-old toddler. At all times, stay out of its line-of-sight, and if you ever need to interact with it, you'd better bring it candy and flattery.

logfromblammo 10y ago

Last time I checked, the (US) tax rules stated that if you sold ESPP shares or exercised employee options grant shares before a year had elapsed, the gain was to be reported as ordinary income on your W-2 and taxed accordingly. So you might as well send 28% of the sale to the IRS immediately, to avoid trouble later on. Anecdotally, I once sold some shares/options, so the same gain was reported in my W-2, again on the 1099 from the brokerage, and apparently one more time from my consumer bank when I transferred the funds from the brokerage using a printed check. The IRS said "Screw your return. We're changing it, because you had additional income you didn't report. Pay up, Buttercup." Well, that "additional income" was actually the same pile of cash, photographed at different times from three different angles. It took 10 years and way too many hours of writing FOIA requests and explanatory letters to sort out. The outcome was not what I would ever consider fair, but as I no longer need to fight it any more, I'm content to write off my losses as an educational expense. Your experience with an ESPP is about 99% likely to be better than mine. But before you take the free peanut butter, take a quick look around for any levers connected to a gigantic spring. Poke it with an 11-foot pole a few times. It's but one of the several reasons why I mentally model the US government as neckless slab of meat that is 7'6", 400#, and a crack shot with an infantry rifle, yet with the ethics of a 4-year-old toddler. At all times, stay out of its line-of-sight, and if you ever need to interact with it, you'd better bring it candy and flattery.