I will start with the caveats, that I'm doing this for funsies and that if you want actual tax advice, to talk/consult with a tax professional. That being said, I would want to know a lot more:
- How is this company taxed? As this may impact your personal tax situation.
- Has the company historically paid any dividends or distributions? Or is it just a illiquid stock with the hope of appreciation?
- When you say normal shares, you mean normal voting shares, correct? If so, is there only one class of stock, or are there different classes with different rights (such as some shares with more votes)?
- Just to confirm, but the company will award you one share for every 4 you purchase (or 25 for 100)?
- What sort of financial statements did you receive/were able to look at? Was it just a print out of a balance sheet and income statement? Or was it full, footnoted financial statements, that have assurance from an outside CPA firm? Just an FYI, an audit opinion is the most assurance, followed by a review report, and compilation provides no assurance. The CPA report should be on their letterhead and will mention what services were done.
- How is the purchase price calculated? Is it done by a 3rd value business valuation agency? Is it a qualitative formula based upon financial numbers (such as book value, or some combination of book value, net income and potentially some multipliers)?
- If the company is the only buyer of shares, what is the re-purchase price? Is it the same price that they sell at? Or is there a haircut, so as to provide employees with liquidity?
- Is it mandatory that employees that quit sell their shares back upon leaving employment? Or can you hold onto them? (Though then I would want to know the mechanics with the vesting schedule, such as if you get a partial cash out for un-vested shares)
- You said that this program was "recently opened". Do you mean that the company just started it? Or that you became eligible for it? As my understanding is that there needs to be a number of written documents related to such a stock purchase plan, and therefore, I would suggest if you are interested in pursuing this (or determining if you want to invest) that you obtain and read all such documents.
- What do you think about the company's prospects for the future? Has it slowly been growing earnings and size year or year, or is it in a cyclical industry, where there are booms and busts and some years where it losses money.
- Is this an ESOP?
- How many shares are being offered under the plan, in relation to the total shares of the company? Basically, will there still be majority shareholders after this (that control at least 51% of the votes)?
- Does the company supply the loan to the employee for the 80% of the shares? Or have they partnered with a bank to provide this?
- Do you see yourself at this job in 5 years?
- How often will they offer such? Is the buying period only once annually? How often can shares be sold back? Can all employees participate? Or only a select few?
- If you pass now, will you be able to take advantage of this in the future? (as this could drive fear of missing out)
Also, the 83(b) election is a personal level election, not a corporate level one. You can google it for more of the details, but basically, once you are granted the bonus shares (which sounds like it is upon purchase; this is not when they vest) you can make a 83(b) election within 30 days. The result of this election, you would have to pay tax on $6,250 (1,250 bonus shares and the $5 current price) at ordinary income rates in the year you were awarded the bonus shares/when you purchase the other shares. The upside of this election is that you don't have to pay tax when the shares vest and the holding period for LTCG starts when awarded, not when they vest. However, the downsides of this election is that if the company folds, or if you leave employment before all of the shares vest, you are out the tax you paid initially (and I don't think there is a way to recover it).
Though, to circle around, if I was in your shoes, besides getting the above questions answered. I would really have to juggle the needing to go into debt to do so, having a large amounts of your eggs in one basket (as both your job and a significant amount of NW would be with the same company), wanting to be debt free, and also look at up coming expenses. Personally, if I was good with the company, I would probably invest less than the maximum (but then, I am also not adverse to taking on debt for such an investment, especially at a guaranteed 3% rate).