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OP never mentioned anything about options, just an ESPP. The special tax attributes regarding the bargain element are applicable only to qualified ISO's. If this is a plain old vanilla stock purchase through payroll deduction it's a lot different.

No, he didn't say, but qualified Sec. 423 plans make up the vast majority of ESPPs....85% as I recall. And both use options, although this may be transparent to the employee.

As I said, Employer stock should be treated no differently than non-employer held stock. It is simply part of one's asset allocation model. If it is a private company, then liquidity issues must also be considered. The argument for misallocating is usually from the standpoint of over-exposure to employer stock due to the, presumably, better understanding the employee has of the employer's operations. But as ENE showed, this can be as misleading as any market misinformation.

BruceM
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