The tax impact upon the sale of shares within an ESPP varies based on how long the shares were held and at what price they were sold. The tax treatment depends on whether a sale is a qualifying disposition or a disqualifying disposition. Download this flowchart to help sort it out.
If you receive equity (stock) compensation from your employer, congratulations!
Next comes the hard part: managing those positions in the most tax-efficient way possible. Who's helping you? Chances are that your HR department will only provide the most basic information about your positions. They will tell you what you have. They are prevented by policy from giving any advice. My clients tell me that the custodians are much help either.
I help my clients with equity compensation to maximize the value of their company stock and option holdings by facilitating timely and prudent diversification decisions; the why, when and how to manage your equity comp positions.
I do this by providing a detailed valuation and risk analysis of equity awards and company stock holdings. This analysis is updated quarterly and looks at value, vesting, expiration, taxation, risk versus reward, leverage, concentration, and the role equity compensation plays in attaining your goals.
Using this analysis and your feedback, we establish decision criteria that are monitored daily to enable us to alert you when to take action. Additionally, we may be able to optimize your diversification strategy for tax efficiency and cash-flow. This iterative and ongoing process facilitates informed decisions.