New myStockOptions Article: 7 Things To Know When You Sell Company Stock To Raise Cash Quickly

Because of pandemic-related hardships, many employees need to sell company stock to come up with cash to meet urgent living expenses. Summarized below, a new article at myStockOptions.com provides a helpful checklist: 7 Topics To Understand When You Sell Company Stock To Raise Cash, https://www.mystockoptions.com/articles/topics-to-understand-when-you-sell-stock-to-raise-cash-quickly

1. Understand capital gains tax to generate capital losses. If you have a choice of company shares to sell, consider selling stock that generates a capital loss which you can harvest against capital gains. When you do not have shares to sell at a loss, consider selling stock with the smallest long-term capital gain.

2. Clearly identify the lot of shares you want to sell. Be sure to identify at the time of sale which share lot is being sold. The default rule is “first in, first out,” but you can choose. Make sure you get clarification on how to indicate specific lots to sell through your brokerage firm’s website.

3. Watch out for wash sales. A “wash sale” occurs if you sell company stock at a loss but you have also separately purchased the same stock within 30 days before or after the sale. That triggers the special rules for wash sales. Under those rules, the loss and holding period are carried over to the replacement shares.

4. Job loss? Carefully follow your company’s post-termination stock option exercise rules. If you lose your job, stock option vesting stops, so be prepared to quickly exercise any outstanding vested options. Typically you have 90 days or less after your employment termination. Check your stock grant agreement and your stock plan for the rules and exercise deadlines that apply to each option grant upon job loss. If anything is unclear, ask your company’s stock plan administrator.

5. Know your company’s rules for ESPP contributions. In an employee stock purchase plan, you can usually withdraw any accumulated funds that are waiting for the next purchase date. Check your company’s ESPP rules for how you do this.

6. Be mindful of holding periods. Remember that the tax treatment is affected by the early sale of shares acquired from employee stock purchase plans or incentive stock options. This is another reason to carefully specify the lot of shares you want to sell, as explained in #2 above.

7. Beware insider trading. If you trade shares of your company’s stock while you know material nonpublic information, you are committing insider trading, which is illegal. This refers to confidential, proprietary company information that, when made public, will positively or negatively affect its stock price. The SEC and the US Department of Justice are watching closely for insider trading related to the stock-market impacts of the COVID-19 pandemic.

Disclaimer: The news site hosting this press release is not associated with myStockOptions.com. It is merely publishing a press release announcement submitted by a company, without any stated or implied endorsement of the information, product or service. Please refer to a tax attorney or CPA for tax advice.

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