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Annotated diagram of Schedule DTax errors can be costly! Don't draw unwanted attention from the IRS. Our Tax Center explains and illustrates the tax rules for sales of company stock, W-2s, withholding, estimated taxes, AMT, and more.

Basics: Core Concepts

Test Your Knowledge Test your knowledge with our Basics Of Stock Grants quiz.

Want to know more? Listen to our podcasts on the basics of stock options, restricted stock, and ESPPs.

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Stock Options 101: The Essentials

Matt Simon
Your company has granted you stock options. Now what? This article explains the essential facts that you must know to understand your stock options and make the most of them.

Restricted Stock 101: Five Essentials Of Restricted Stock & RSUsThis is premium content

The myStockOptions Editorial Team
While restricted stock and RSUs are relatively straightforward, they have technical aspects you must understand to make the most of them. Learn the essential facts of restricted stock and RSUs, including basic concepts, vesting schedules, and tax treatment.

Six ESPP Essentials (Part 1): Enrollment, Plan Type, Purchase TimingThis is premium content

The myStockOptions Editorial Team
An employee stock purchase plan can be a great benefit, but the rules and taxation are tricky. This two-part article presents six topics you must be familiar with to get the most from your ESPP.

Stock Appreciation Rights 101 (Part 1)

Bruce Brumberg
Stock appreciation rights (SARs) are being granted by some companies. To help you understand SARs, Part 1 explains the "appreciation," the role of exercises, and taxes at exercise.

NEW! Incentive Stock Options: What You Must Know To Make The Most Of ISOs And Avoid Costly MistakesThis is premium content

The myStockOptions Editorial Team
Incentive stock options (ISOs) are potentially quite valuable. However, they are more rule-bound, complex, and risky than nonqualified stock options (NQSOs). In fact, mistakes with ISOs can be quite costly. This article explains the essential facts of ISOs that you must know at the time of grant, before you exercise the options, and when you sell the shares.

VIDEO! Restricted Stock & RSUs (Part 1): Key Aspects To Know

Bruce Brumberg
Presented by the editor-in-chief of, this engaging video covers the fundamentals of restricted stock, restricted stock units (RSUs), and performance shares to help you make the most of these grants. This video covers key concepts, such as vesting schedules and understanding your grant's value. Running time: 4:37

VIDEO! Employee Stock Purchase Plans (ESPPs): Core Concepts & Benefits

Bruce Brumberg
In this video, the editor-in-chief of explains the fundamentals of employee stock purchase plans (ESPPs). Animated examples clearly illustrate the benefits that ESPPs can provide for employees. Running time: 3:35

VIDEO! Employee Stock Options: Core Aspects To Know

Bruce Brumberg
With expert insights from the editor-in-chief of, this video covers the essential aspects of employee stock options that you must know to make the most of them, including the key concepts of vesting, exercise, and the option term. Running time: 4:12.

Stock Option Fundamentals (Part 1): Know Your Goals And Terms

Marilyn Renninger
Stock options aren't just for the folks on mahogany row any more. But turning stock options into the real green stuff takes some know-how. You need to know certain features of your grant to decide when to exercise your options and sell the stock.

How To Avoid The Most Common Stock Option Mistakes (Part 1)

Beth Walker
Avoid the mistakes others made with options during past ups and downs in the stock markets. Situations where common errors tend to arise can be classed into nine categories, including option-term expiration, job termination, corporate mergers, financial planning, and various life events.

How To Avoid The Most Common Stock Option Mistakes (Part 2)This is premium content

Beth Walker
Avoid the mistakes others made during prior ups and downs in the stock markets. Common errors arise in nine different situations, including job termination, mergers, financial planning, term expiration, and various life events.

A Holistic Approach To Managing Equity CompensationThis is premium content

Geoffrey M. Zimmerman
Podcast included! Planning for equity compensation begins with identifying the role stock grants will play in your life, whether for retirement, college funding, or other goals. This article offers points to consider for three different types of investors.

NEW! LLCs And Equity Incentive Plans (Part 1): Making Sense Of Your Equity InterestsThis is premium content

Daniel N. Janich
Podcast included! If you work for a limited liability company (LLC), your employer may want to offer you an incentive, above and beyond salary, that is based on receiving a share of equity in the company. This article discusses types of equity plans that are available to LLCs and also examines the considerations involved in the establishment of an equity compensation program for an LLC.

NEW! LLCs And Equity Incentive Plans (Part 2): Income Tax Consequences Of LLC Equity GrantsThis is premium content

Daniel N. Janich
Podcast included! The tax treatment of equity compensation provided by a limited liability company (LLC) is an important consideration for both the LLC that grants equity and the employee who receives it. Part 2 of this series delves into the federal tax consequences of each type of equity plan.

Stock Option Terms: What You Can ExpectThis is premium content

Richard Friedman
Podcast included! Get a sense of what you should, and should not, expect in the terms of your stock option grant. A major survey of companies looks at trends in vesting schedules, post-termination exercise rules, and other plan features.

How Does Your Stock Plan Compare? (Part 1)

Kate Victory
How typical are your equity awards? Stock plan surveys let you compare the terms of your grants with the common practices of many companies. Part 1 focuses on types of equity award, reasons for making grants, vesting schedules, and option exercises.

How Does Your Stock Plan Compare? (Part 2)This is premium content

Kate Victory
How typical are your grants of stock options or restricted stock/RSUs? Stock plan surveys let you compare the terms of your grants with the common practices of many companies. Part 2 focuses on grant guidelines, option expiration, job termination, and corporate changes of control.

What Are My Stock Options Worth?This is premium content

Richard Friedman
Your company just gave you a stock option grant, or your existing options are underwater. You wonder: "What are my stock options worth? Are they worth anything at all?" Learn about different valuation methods, including Black-Scholes.

Stockbrokers' Secrets: Stock Option Strategy (Part 1)

John P. Barringer
My clients want to exercise options shortly after they vest for a significant purchase, like a fancy boat or a sports car. The most expensive boat or car I can imagine is the one bought with your just-vested options. Tips I tell clients include not exercising too soon or waiting too long.

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What are the top 10 questions I should ask about my stock grants?

You should know the answers to the following questions. Understanding the topics involved will help you to...

What is a stock option?

Generally, a stock option is a right that a corporation grants...

What is restricted stock? Does it differ from restricted securities?

Don't confuse restricted securities and restricted stock. They are very different...

What advantages do restricted stock and RSUs have over stock options? How do the two grant types compare?

Restricted stock always has some value to you even when the stock price drops below the price on the date of grant...

Why do companies shift from granting stock options to granting restricted stock units, and then sometimes back again to granting at least some stock options?This is premium content

Surveys indicate that many companies use a variety of grants, including both stock options and restricted stock units (RSUs) in tandem. There are many possible reasons why a company might switch from options to RSUs...

What is an employee stock purchase plan?

An employee stock purchase plan (ESPP) is a type of stock plan that permits employees to use after-tax payroll deductions to acquire shares of their company's stock. Plans can have...

How does an ESPP differ from a stock option plan?

Employee stock purchase plans tend to be viewed as a benefit while stock options are a form of compensation. From an employee perspective, there are some differences in operations, eligibility, and design...

Are all stock options taxed the same?

No. The taxation of your stock options depends on whether they are...

What is the difference between restricted stock and performance shares or units?This is premium content

Shares of restricted stock are issued up front at grant, but you do not own them outright and cannot sell or transfer the shares until the time-based restrictions lapse. With standard restricted stock units the situation is basically similar, while with performance shares your company sets goals that must be met, such as...

What are stock appreciation rights?

SARs, or stock appreciation rights, are contractual rights that entitle you to receive the appreciation from a corresponding number of company shares after the grant date. Instead of exercising a stock option, you...

Do you have a chart that compares the tax treatment of stock options, restricted stock, RSUs, and ESPPs?This is premium content

gives the types of taxes, when they are triggered, and the tax withholding (if any) for various forms of equity compensation granted in the United States. For details, examples, and illustrations...

How do stock options, ESPPs, and restricted stock differ from the company stock fund or contribution offered under my 401(k) plan?This is premium content

401(k) plans are a type of broad-based, tax-qualified retirement plan funded by pre-tax contributions, unlike...

Why do companies grant stock options, restricted stock, and other equity awards? Do employees really value them?

A company may grant equity awards for a variety of reasons. Surveys show that...

How many people have or are eligible for stock options, restricted stock/RSUs, or ESPPs?This is premium content

The types and distribution of stock grants are changing, along with the patterns of eligibility. Data from research and surveys can give a sense of how prevalent equity awards are...

Are public resources available for doing research on a company's stock compensation practices, the grants it is making, and the holdings of its executives?This is premium content

One resource is the SEC's website. There you can search on the SEC's EDGAR system for the filings discussed below. Another resource is the...

Can limited liability companies use stock options or make other stock grants?This is premium content

Limited liability companies (LLCs), which are somewhat similar to S corporations, have membership interests and not stock. Therefore, LLCs cannot offer stock options, restricted stock, direct rights to shares, or an employee stock purchase plan. However, they can give...

Can some types of companies not offer stock options or other forms of equity compensation to their employees?

Typically, only for-profit corporations are eligible to offer stock options and other stock grants...

Why doesn't my employer offer me equity compensation?

If your employer is a for-profit corporation, it probably can offer stock options, restricted stock, or other types of equity compensation to its employees. There may, however, be many reasons why your employer is not offering stock grants...

Are there any limitations on my company's discretion in granting stock options and/or restricted stock?This is premium content

Almost none, assuming the legal and other technical formalities are followed in creating...

UPDATES! Are stock options, restricted stock, and ESPPs subject to ERISA requirements and regulations?This is premium content

The Employee Retirement Income Security Act (ERISA), whose regulations on tax-qualified retirement plans include rules for employee benefit plans such as 401(k) plans...

Are stock plans affected by the Supreme Court's decisions on marriage equality?

These rulings do affect stock plans. Among the affected federal laws and regulations are those which shape the design and administration of...

What is a stock plan?

A stock plan is a formal document that contains the general rules of operation that are common to all...

What are the important documents I need to understand a stock plan? What are some examples of plans?This is premium content

Carefully read both the stock plan itself and other materials your company gives you or posts on a website. You should look at the following...

Are different types of stock options granted by employers?

Yes. The two main types are nonqualified stock options (NQSOs) and incentive stock options (ISOs). The names indicate their...

UPDATES! How common are stock options, restricted stock, performance shares, and ESPPs outside the United States? Do surveys show trends?This is premium content

Stock plans can be global, and in some countries they are more popular than they are in the United States. Consulting firms and other groups have conducted surveys about the use of stock compensation in both developed and emerging economies...

When did stock option expensing become mandatory? How does this affect and change my stock grants?This is premium content

Expensing became mandatory for calendar-year companies several years ago. Because companies take an earnings charge for the "fair value" of stock option grants on their income statements, companies have changed their grant practices by reducing the number of stock options, moving to grant more...

Am I entitled to voting rights or any stock dividends paid to shareholders before I exercise?This is premium content

No. Until you exercise a stock option, you do not have the rights of a...

Will I receive a copy of my company's annual report?

Under SEC Rule 428(b), your company is required to give you the...

What is a "nonqualified stock option"?

A nonqualified stock option, or NQSO, is a type of stock option that does not qualify for...

What is an incentive stock option?

An incentive stock option (ISO) is a type of stock option that qualifies for special tax treatment...

What are the different types of employee stock purchase plans? What are their features?This is premium content

In general, an ESPP fits into one of three categories: tax-qualified, not tax-qualified, or direct purchase...

How does a Section 423 ESPP work?

Employee stock purchase plans of this type (sometimes called "tax-qualified" ESPPs) meet the...

What is a vesting schedule?

A vesting schedule dictates when you may exercise your stock options or when the forfeiture restrictions lapse on restricted stock. Vesting is determined separately for each grant. A schedule is time-based if you must...

What are capital gains and capital losses? What are the capital gains tax rates?

Capital gain is income that arises from the sale of a capital asset. Gain from the sale of securities held for investment, such as shares acquired from stock compensation...

What methods may be used to exercise an option?

Check your company's stock plan for the allowed methods and procedures. The most common methods involve...

Other than paying the exercise price, what else must I do to exercise an option?

The specific steps vary among companies. You usually first need to make an irrevocable election to exercise...

When and how is the income at exercise taxed?

The tax treatment depends on the type of stock option. This website has detailed content about tax withholding and reporting in the Tax Center, which includes annotated examples.

What is the standard stock option term? Do options ever expire?This is premium content

You want to know the term of your grant to prevent valuable stock options from expiring. Most options are granted with a 10-year term, but some have a shorter life, such as...

Once my in-the-money options vest, are they mine forever?This is premium content

No. You could lose them in any of the following ways...

How does a compensatory stock option differ from a publicly traded stock option listed in a newspaper's business section?This is premium content

Publicly traded stock options (or "call options") listed in newspapers...

What is "common stock"?This is premium content

Common stock is the form of securities issued to the vast majority of owners of a business corporation, as in an option exercise or ESPP purchase...

What is "preferred stock"?This is premium content

Preferred stock is a class of equity securities of a corporation that is given greater rights than common stock...

I have little cash. Will I still be able to take advantage of my company's stock options?This is premium content

Many companies allow...

What is the SEC?

The SEC is, in full, the Securities and Exchange Commission. The SEC is the federal agency...

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