ESPP Pricing and Post-Purchase Price Volatility — How Is It Treated? - post regarding Cisco Systems Inc. layoffs

ESPP Pricing and Post-Purchase Price Volatility — How Is It Treated?

The stock is down 6.5% over the past six months.

Under the employee stock purchase program, shares are acquired at the end of each six-month period. At that time, a charge appears.

Is that charge simply the cost of the shares purchased, or does it also include taxes on any profit?

My understanding is that the shares are purchased at the lowest price during the previous six months. If the stock price is higher at the time of purchase, the difference may be treated as employment income and taxed accordingly.

If the stock price drops shortly after purchase, does that mean you effectively paid tax on income that you never actually realized?

#ESPP #Stock #Tax

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Either way it seems the OP has a good point

the highest point was just set for the current (next buying period) naturally by the end of it that most probably be lower than what we just saw days ago
At that point Cisco will buy back shares raising the price of the shares and forcing us to pay next more than we would pay if they do not buy back but less that today (which I doubt it will be ever reached soon).
Bottom line: if I am understanding this right, by buying back shares near the end of the next employee purchase plan kick in date, Cisco will force their employees to pay more for the shares they are buying

My understanding is that the shares are purchased at the lowest price during the previous six months.

Wrong. It's 15% off the lowest price of either the start of the offering period (which has a specific definition that you can read in the ESPP documentation but could actually be as far back as two years), or the purchase date. If the stock is $100 on Jan 1st, drops to $1 on March 1st, and recovers to $150 on June 30th, then you pay $100 - 15%, so $85. The $1 dip is not relevant.

As for tax, I started writing an explanation. Then it got longer, and longer, and still didn't cover every possibility so instead I deleted it and will only say "read the Cisco ESPP documentation and if you still don't understand it, get proper tax advice". It's not something you should be asking any message board about, least of all this one. These folk don't know sh-t.

stock is up 9% over the past six months unless you're using a different version of math than the rest of the world

shares are also not purchased at the lowest price during the previous six months. that's not how the look back works

if you actually work here then you can watch the recording of the morgan stanley rep explaining all of this in the most recent ESPP webcast that happened on December 3

Little of what you said is correct but if you're an employee just go to the P&C page and read the documentation.

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ESPP Pricing and Post-Purchase Price Volatility — How Is It Treated?

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