Liquidating a company capital gains
For that reason, it makes sense to not only understand your investment goals and objectives, but also to understand the potential tax implications of each type of stock ownership before deciding which of your shares to liquidate.Tax on Outright Ownership of Company Stock One simple strategy to accumulate company stock is to purchase it on the open market through a brokerage account or other investment account.
Long-term capital gains are subject to preferential long-term capital gains rates, potentially as low as 0%, but more commonly 15%.
Depending on how long you have held the stock, and how much gain or loss is unrealized, selling shares that are owned outright may be your best strategy that keeps your tax liability lower, while also decreasing your total allocation to company stock.
Tax on an Employee Stock Purchase Plan Employer stock purchase plans generally allow employees to buy shares at a discount, sometimes up to 15% of the share price.
Forced ownership, on the other hand, may include the grant of restricted stock, non-qualified stock options, or incentive stock options.
Ultimately, as more and more ownership is purchased (given), it’s entirely possible that a greater percentage of one’s net worth becomes concentrated in a single equity position (anti-diversification*) and the risk of major gain and loss likely increases.
Short-term capital gains (losses) will be recognized if you sell the shares within 1 year of the date of purchase.