Disclaimer — I've read What should I do with the stock from my Employee Stock Purchase Plan? and the answers seem to be both slightly wrong (from what I know) and contradictory, which is why I ask this question.
Last year I took a job with a public company for the first time. This company has two 6-month ESPP periods per year. The purchase price on the purchase date is 15% less than the lesser of the price on the first or last day. For the second period, the first date price carries through if it is the lesser.
The money used to purchase the shares is pulled from my income over those 6 months, with after-tax money.
Example (not real numbers):
6 months of contributions to ESPP: $3000
Stock price on first day (grant date): $20
Stock price on last day: $25
Purchase price: $20 * 0.85 = $17
Shares purchased: 176
Share market value on purchase date: $4400 (47% gain)
In this scenario, I made nearly 50% gain if I sell the stock immediately. This is what I'd like to do, since I see no reason to heavily weight my portfolio with a single stock.
However, from what I understand, I must hold onto my stock for 18 months (at least one year from the purchase date and two years from the grant date) for this not to count as compensation income for tax purposes.
My questions are
If I only sell a portion of the stock (say, $3000 worth), is the "compensation income" counted proportionally (approximately 32% of it would be added to my tax liability), or is it counted against the after-tax money I put into the stock? (liability being cash-out minus contribution, nothing in this case)
The accepted answer says that "it's advantageous to hold for one year" but also "I sell out early". I understand that at least in my case, it's actually 18 months, but regardless, those two statements sound like contradictions. Anything could happen in that time. So which one is really advantageous?
Lastly am I understanding this correctly that at the worst case, it will just treat the gain as additional income, and not additional income and capital gains (double taxation?)