Hi all. Long time lurker, first time poster. I intend on posting a case study soon, but I have a tax question:
I have been investing in my prior company's ESPP from 2013 to the end of last year. It's all in my taxable brokerage. The plan was non-qualified, so as I understand it it follows normal short/long term capital gain tax treatment rules (i.e., I only have one lot of shares bought on 12/31 that is still short-term).
I have 6% of my net worth in this stock, so I'd love to free up the funds to invest in my normal index funds. However, it has a collective $12000 long-term capital gain at the moment.
To support this, I recently (almost 30 days ago) exchanged some VTSAX with VLCAX in my taxable brokerage to get a $5100 long-term capital loss. I'm fairly confident I have avoided any wash sale issues because I do not reinvest dividends.
If I sell the ESPP stock, will any capital gains from the sale be directly offset by the $5100 loss? This is my first time selling stock at all (besides the exchange) so I'd like to make sure before I do it so I avoid having a tax bill I wasn't expecting. I'm already not looking forward to the tax forms, especially as I will have to make a lot of adjustments on the Form 8949 to account for the 10% discount that was already taxed throughout the years.
I estimate I can free up 70-75% of the cash without paying additional taxes if I am correct. The remaining 25% has an extra $7000 in capital gains that if I sell I will need to increase my withholding to make up the ~$1000 in additional taxes before year end.
If it matters, the stock has around a 3.6% yield. However, I value getting the money into an index fund much more.
Thanks in advance!
