The Motley Fool Discussion Boards

Previous Page

Financial Planning / Tax Strategies

URL:  http://boards.fool.com/i-work-for-a-company-in-the-djia-in-which-i-can-15379843.aspx

Subject:  Re: Employee Stock Purchase and capital gains Date:  7/16/2001  2:50 PM
Author:  Charlie48K Number:  52580 of 121223

I work for a company in the DJIA in which I can buy shares at 15% discount. I'm 25 years old and have been investing for a little over a year. Last year I invested about $7000 (which is almost my net worth) total in 401k, a couple individual stocks, and my company's stock.

I want to make sure I'm diversified and now I'm getting very heavy on the company I work for (they match 401k through company shares too).

I'm thinking about staying in the Employee Stock Purchase plan and buy stock at 15% discount and then sell them right away and invest in other funds/stocks. Will the capital gains of doing this cost more in the long run? Is there a formula I can use for evaluation? Should I just limit my Employee Stock Purchase and just use that money to put into other investments?


If you sell immediately it's all ordinary income, because all the gain is due to the 15% discount, which is always ordinary income. The capital gains status comes from holding the stock. Still, it's almost free money.
Copyright 1996-2014 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us