penguinise t1_iujozz6 wrote on October 31, 2022 at 9:02 PM

>I want to confirm that immediately selling ESPP is always going to be profitable (or almost always, since I'm assuming I will have to manually sell on Etrade when I get the stock granted to me?).

Yes. As you note, the only technical risk is the few business days between exercise and practical receipt of the shares.

>My parents were saying that the taxes on the gain isn't worth it, but I'm not understanding their argument. Even if I get taxed at a high rate on the short term gain, I'll still end up making money since I got a 15% discount?

Also correct. The discount is ordinary income, on which you would never pay a 100% tax.

>Does this mean that if the company stock goes up throughout the offering period, I will still only be purchasing stock at the value of the enrollment date and making even more money, even if I sell the shares as soon as I get them?

Yes. This is usually called a "lookback" provision.

>Will there be any lag between me getting the shares on the "exercise date" and being able to sell them?

Only an administrative delay. Varies by plan custodian but it is usually 1-5 business days. The shares are delivered "as soon as practicable" but you will have a few days of at-risk time.

TriggerHappy0071 OP t1_iujqc1t wrote on October 31, 2022 at 9:11 PM

Great thank you for the answers. I assume the risk of the company stock dropping >15% during that administrative delay is very low then? Thank you!

penguinise t1_iujqvp2 wrote on October 31, 2022 at 9:15 PM

>I assume the risk of the company stock dropping >15% during that administrative delay is very low then?

Generally yes. Obviously anything is possible, but it is very unlikely - especially if (as ought to be the case) your company is not reporting earnings during those few days.

TriggerHappy0071 OP t1_iujriwu wrote on October 31, 2022 at 9:20 PM

Great thanks, and should I be concerned about this in the booklet?

The Company also may require that such Shares be retained with such broker, trustee or agent for a designated period of time and/or may establish other procedures to permit tracking of disqualifying dispositions or other dispositions of Shares.

Is this typical and would it mean that I have to wait some arbitrary amount of time before I am permitted to sell?

penguinise t1_iujt4b0 wrote on October 31, 2022 at 9:32 PM

I think that is saying that they won't permit you to ACATS the shares in-kind to another broker, so that they can no longer track them for tax purposes. There is interplay because selling the shares generates ordinary income which is customarily reported on your W-2.

I would not be concerned about a minimum holding period until a specific policy is actually announced. It's normal not to have one.