Stanley Trotta with Robert Gordon
With tax increases in mind, now may be a good time to re-evaluate your current financial-planning strategy. Should you take action with stock options now or wait until new rates apply? Part 3 looks at incentive stock options.
Kaye Thomas
A trap awaits those who, after selling shares from exercised ISOs to avoid AMT, want to buy back the stock.
Mark Miller
For employees and executives, international travel and relocation are increasingly common. The taxation of "mobile employees" is always complex, and never more than with equity compensation. Part 1 introduces the key concepts and rules, including the sourcing and apportioning of income.
Mark Miller
International assignments or relocations can present attractive opportunities for career advancement. However, the taxation of equity compensation for mobile employees raises complex issues. Part 2 looks at specific scenarios, withholding taxes, and tax equalization.
Robert Gordon and Charlotte Lyman
Hedging stock from exercises of incentive stock options (ISOs) is complex, but it is possible in certain situations. Financial engineering can create a floor under the ISO stock while letting the capital gains holding period continue.
Bruce Brumberg
NEW! The stock-sale information provided by brokers on IRS Form 1099-B has changed. Cost-basis reporting, both for your broker on Form 1099-B and for you on your tax return, is now more complex, confusing, and vulnerable to errors. This article explains the crucial facts you must know to avoid overpaying tax or attracting unwanted IRS attention.
Bruce Brumberg and Lynnette Khalfani
UPDATED! This tax return season has the potential to be more confusing than most if you sold stock last year. You must now file the new IRS Form 8949 along with the revised Schedule D. This change stems from the expansion of the information that brokers must report to you on IRS Form 1099-B. Read this article for tips on these and other crucial tax return topics.
The myStockOptions.com Tax Team
UPDATED FOR 2012! Learn how to report your sales of stock on the new Form 8949 and revised Schedule D of IRS Form 1040.
The myStockOptions.com Editorial Team & Contributors
Tax reporting with incentive stock options (ISOs) can be tricky. Learn what you need to report on your return at each stage of your ISO's life cycle.
Bruce Brumberg
If there's a way to make learning about tax forms fun, we'll try it. Watch and hear this animated presentation on the expanded IRS Form 1099-B, the new IRS Form 8949, and the revised Schedule D. Learn now to prevent costly tax return mistakes later!
Ellie Kehmeier and Elizabeth Drigotas
The final rules clarify and consolidate a tangle of proposed, temporary, and final regulations, as well as other guidance, that governed the taxation of ISOs, including rules for disqualifying dispositions.
Ellie Kehmeier and Elizabeth Drigotas
The final rules clarify and consolidate a tangle of proposed, temporary, and final regulations, as well as other guidance, that governed the taxation of ISOs, including rules for the $100,000 ISO limit.
Michael Frank
The IRS has issued final regulations on ISOs. Understand how these final regulations increase the risks of early exercise.
W.E.B. Bantling and Michael Beriss
Learn about year-end planning specifically for incentive stock options, including ideas related to the alternative minimum tax.
Robert Gordon
Investment News
Before the end of the year, review any ISO stock you're holding from earlier exercises and consider strategies for the following year. (Registration is required.)
Return to top of this page
If you have more than one batch of company stock, you are responsible for providing your broker with enough information to identify which shares to sell. If you do not specify...
Generally, each state you live in determines what income is taxable and when. For administrative ease, many companies...
A "stock swap" or "stock for stock" exercise is a stock option exercise in which the exercise price is paid with shares of company stock you own...
Yes, you can use ISO stock to exercise NQSOs without disqualifying it, as the...
At some companies, international assignments are often accompanied by what is commonly called an equalization package. To give you an incentive to accept the international assignment, the company agrees to...
It is easy to make tax return mistakes that lead to paying more than necessary or (perhaps worse) an IRS review. This tax season in particular will be more confusing than most because of the new Form 1099-B, the new Form 8949, and the significantly revised Schedule D...
After you have held the stock more than two years from grant and one year from exercise, the spread between the exercise price and the sale price is...
By selling the ISO stock when you exercised it, you eliminated the spread at exercise from the...
To report the sale of shares in a sell-to-cover exercise, you complete Form 8949 along with Schedule D for the year of...
The rules are similar to those that apply to sales of ISO shares made in the same year as exercise; however, the difference is...
The calculation of the amount of ordinary income and capital gain/loss will vary according to the...
The final IRS/Treasury regulations on ISOs clarify that the amount of ordinary income in a disqualifying disposition is...
For people who sold shares in 2011, this tax season presents major changes in tax reporting and filing...
More information is now reported on this form than in past years. This may prove to be more helpful, but it also may be more confusing. Issued to you by your brokerage firm, IRS Form 1099-B is an important document that you must have to complete your tax return. Recent legislation has changed the form in significant ways that you must understand...
You will need to gather certain information to complete your tax return. The broker will send you IRS Form 1099-B for the proceeds...
When your W-2 income is added to the price you paid for the stock, this is your cost basis on your tax return. The table below presents the compensation portion of your tax basis for all types of stock grants and ESPPs...
The new Form 8949 is where you now list the details of each stock sale on your tax return, while the revised Schedule D is where you now merely aggregate the column totals from Form 8949 to report your total long-term and short-term gains and losses. From our interpretation of the forms and their instructions, myStockOptions.com recommends the following reporting steps to avoid overpaying taxes...
This type of situation, in which the disqualifying disposition does not appear on the W-2, is more likely to occur when...
Let's first review the tax rules and the W-2 reporting. The tax basis for...
If you simply lack the funds to pay your income tax, you may want to apply for a payment agreement on the...
The IRS can seize your stock options if it applies a federal tax lien to you for unpaid taxes. After seizing your stock options, the IRS can also...
While some companies might permit this if asked, the IRS may not allow the practice. The situation is far from clear, as the tax code...
With approval from the board, and perhaps also shareholders, your company can modify outstanding grants in a way that is consistent with its stock plan. However, it should avoid tax pitfalls for you and the company, such as...
A disqualifying disposition occurs if you sell, transfer, exchange, gift, or donate the stock that you acquired without...
No. Under the 2003 tax cut, qualified dividends are taxed at the same rates as long-term capital gains...
The tax law says that you can offset losses against only the same type of income...
No. All or part of it may be ordinary income. You have capital gains only when you...
At a minimum, do not expect any new stock option grants with an exercise price lower than the market price on the grant date. The tax treatment varies by type of grant. Some of the companies involved in the controversial backdating of stock options restricted employees from...
The spread at exercise is what matters for the tax calculation...
The put options you buy give you the right to sell the stock at a price you choose. With call options you are selling the right to someone else to "call away" the stock you own. The IRS ruled that the...
The United States taxes the worldwide income of US citizens regardless of whether the income arises from activities in the US. In addition, the other country may impose taxes too. But the US has tax treaties with certain nations to help taxpayers avoid double taxation...
For estate-tax purposes, unexercised incentive stock options (ISOs) are treated like NQSOs. But ISOs receive more favorable tax treatment at exercise than NQSOs do. Your heirs or estate get...
If, as is normally the case, you have no power to refuse or delay your stock sale, no exception...
With stock grants of normal size, you face no tax impact beyond the standard tax treatment. ISOs may be converted to NQSOs should any acceleration of vesting cause...
This depends on what triggers vesting. Section 162(m) of the tax code limits your company's deduction to $1 million unless a senior officer's compensation over this amount meets the performance-based exception. Stock grants are structured to meet this by...
A number of tax law provisions that may affect your stock grants were introduced in the American Jobs Creation Act (AJCA); the final regulations on deferred compensation under IRC Section 409A, which adopt the...
A casualty or theft loss would allow you to deduct the lost amount against your ordinary income, subject to some limits. However, Treasury regulations and court rulings would probably stand in your way. Nevertheless, what you can do is...
This depends on several factors. Below we present 10 ideas...
Return to top of page
Test your knowledge with our Stock Options quiz.
Listen to our new podcast on the basics of stock options.
Tax 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.
