I want to participate in ESPP program for 15% discount but don’t want to hold stock for various reasons. What’s tax implications of selling it right away? Should I sell it within a day after purchase to limit short term taxes?
If you hold for less than a year you pay income tax on (purchase price - sale price) holding for a day or 364 days makes no difference other than sale price fluctuations
Gains are treated as regular income.
ESPP is nothing more than buy stock with cash except that you buy at a lower price
There’s no gains if you sell immediately right?
The 15% discount you get is counted towards capital gains. Uncle Sam will find you and suck your money like he knows he deserves!
Ah I see. Thanks chump123!
Typically selling it right away would have the same implications as selling it before long term capital gains tax would apply (one year)
You don’t understand how this works
Espp is the last thing to sell after RSUs
For taxation you have to also consider if it is a qualified plan or not. Most are but worth confirming. https://www.rootedlending.com/faqs.html explains various aspects of ESPP.
Sell it right away and you won’t have any capital gains to pay taxes for Its taxed as regular income
Not true. You will pay tax on the gains
Yes, true. The bargain element (aka, the discount) is taxed as income (holding to qualifying disposition just changes the amount of the bargain element). Still you're going to pay that regardless. If you sell immediately with a limit order at fmv of the purchase date, you're short term capital gains will approximate $0.