ESPP or RSU selling? Comparing purchase price vs tax status

Submitted by Past-Swimming-9010 t3_z79206 in personalfinance

Hi all,

I have three ESPP stock periods and comparing that to a few RSU vest periods i'm trying to consider which is more advantageous to sell right now given where the stock is at.

Background. I joined my company in 2020 - since then like most companies the stock has been hit by more than half of what it was. I'm trying to understand what to sell as I need to realize this cash during the next sell period coming up in two weeks.

Current price is about $160

  • RSU 1 - 8/2020, $475 purchase price
  • RSU 2 - 8/2021 $550 purchase price
  • RSU 3 - 6/2022 $200 purchase price
  • ESPP 1 12/2021 $300 purchase price (15% discount) (only 1 over 1 year holding period)
  • ESPP 2 6/2022 $210 purchase price (same discount
  • ESPP 3 12/2022 $TBD (probably $160 less the 15% discount)

I've already realized the max tax loss harvesting of $3k so given this is happening in december, what is my best option? Sell the RSUs for the money I need and hope and wait the ESPP goes back above the purchase price or wait to sell for next year for more tax loss harvesting? (I don't want to pull ahead the tax loss for next year.)

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Comments

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Mysunsai t1_iy5cct2 wrote

> I don’t want to pull ahead the tax loss for next year

Why not? Losses carried forward from this year are 100% identical to losses taken next year.

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Past-Swimming-9010 OP t1_iy5dgcu wrote

Replying to Mysunsai (#744,019)

Can you walk me through the exact scenario? I understand the point. Though if I don't have to take a loss on them, should I avoid it?

My thought is why realize a loss when I don't need to. And if I do need to realize a loss, I have all of next year to do it.

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theoriginalharbinger t1_iy5j2wi wrote

For the ESPP, preferential tax treatment is given for 2 years after the beginning of the offer period, not purchase date (you have to have at least one year from the end of the offer period to get long term capital gains tax, and at least 2 years from beginning of offer period to avoid a disqualifying disposition).

Your ESPP's will require you to pay ordinary income tax on the 15% discount, so you're probably just better off selling your RSU's. Given carry-forward losses, it really doesn't matter that much unless you know you'll be in a higher or lower tax capital gains bracket next year.

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