Strategy

ESPPs can offer significant value, but deciding when to sell requires more nuance than it may seem at first glance. Here are the core points from the lesson:

• If there’s no holding period requirement, selling immediately after purchase can yield guaranteed gains, especially with discounts and lookback provisions
• Holding ESPP shares introduces market risk and complexity, and your decision should reflect whether you’d buy the stock outright if given the equivalent in cash
• A holding period aligned with qualified disposition rules may offer better tax treatment—but not always; in some cases, a disqualifying disposition results in lower overall tax
• When stock declines during the offering but rebounds before sale, the tax owed under a qualified disposition may be higher due to how ordinary income is calculated from the offering price rather than purchase price

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