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Some people--I'm one of them--think that you should look at employer stock differently than how you look at other stocks.
Alternatively you can be of the mind that 5% or 10% in ANY single stock is too heavily weighted. Regardless of whether that's the employer or not. And if you really stick to that, you keep yourself from being too overexposed. (Advice that I am working towards following myself)

If this is a plain old vanilla stock purchase through payroll deduction it's a lot different.

I think the most common (ie. vanilla) stock purchase plans are ones where there is a payroll deduction for some period of time (3 months, 6 months, 12 months) and the stock is purchased at a discount (ex. 15% cheaper) to the stock price of the lower of the beginning and end of the period.

I don't know any ESPP that doesn't give some incentive like that - otherwise, why would the employees put money in through the payroll deduction? They might as well just buy it on the open market if there isn't some bargain element.


Usually the company has documentation explaining the different tax situations you could encounter based on sales price (selling for < purchase price; and selling for > purchase price but < purchase price + bargain element; selling for > purchase price + bargain element) and different holding times. They'll tell you it's not tax advice - but it will help you understand how your taxes *should* look.
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