SARs: Taxes

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What You Need To Know About Stock Appreciation Rights (SARs): Part 2

Bruce Brumberg
UPDATED! Stock appreciation rights, referred to as SARs, are garnering interest among companies. Part 2 discusses taxes, IRS concerns, and why companies like SARs.

Reporting Company Stock Sales

The myStockOptions.com Tax Team
UPDATED! Learn how to report your sales of company stock on Schedule D of IRS Form 1040. Our comprehensive guide to Schedule D reporting covers sales of stock from nonqualified stock options, incentive stock options, restricted stock, restricted stock units, employee stock purchase plans, and stock appreciation rights.

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FAQs (Jump to articles)

Does all the stock option content on this website also apply to stock appreciation rights (SARs)?

Much of the stock option content is relevant to SARs. All the key stock option features...

What are stock appreciation rights (SARs), and how are SARs taxed?

SARs, or "stock appreciation rights," are rights your company grants you to receive the value of appreciation in shares of its stock from the...

What are the biggest mistakes related to stock appreciation rights (SARs) that I can make on my tax return, and how can I avoid them?

It is easy to make mistakes that lead to paying more tax than you need to, or that may even prompt a review by the IRS. Some of the mishaps are...

W-2 diagram! What will my W-2 show after I exercise stock appreciation rights (SARs)?

The gain from your SARs exercise(s) is totaled on the W-2 with other income in the following boxes...

Schedule D diagram! How do I report any gain that results from the sale of my stock appreciation rights (SARs) shares on my federal income-tax return?

Whether you sell all the stock at exercise or hold the stock and later sell it, you need to complete a Schedule D ("Capital Gains and Losses") for the year of the sale and file it with your Form 1040 federal income-tax return. You will need to know...

NEW! I acquired stock from exercises and restricted stock vesting a few years ago. When I sell the stock, how do I rediscover the cost basis for Schedule D of my tax return?

Let's first review the tax rules and the W-2 reporting. The tax basis for...

UPDATED! Does the American Jobs Creation Act, particularly Section 409A on deferred compensation, affect my stock grants?

A number of tax law provisions and interpretations that may affect your stock grants occur in the wide-ranging American Jobs Creation Act of 2004 (AJCA); the final regulations on deferred compensation under Section 409A (issued on April 10, 2007), which adopt the...

NEW! What is the tax impact on me if my company modifies its outstanding stock options and stock appreciation rights?

With approval from the board and shareholders, your company can modify outstanding grants in a way that is consistent with its stock plan. It should avoid...

When I exercise my stock appreciation rights (SARs), will the amount of tax withheld cover the amount of tax that I must pay when I file my return?

Employers usually withhold federal income taxes at the flat rate required for supplemental wages, which is...

I'm no longer an employee, so why is there withholding on my NQSO or SARs exercise?

Former employees' transactions follow the same withholding and reporting requirements that apply to...

If I exercise stock appreciation rights (SARs), will I need to make estimated tax payments?

At a minimum, at the time of your SARs exercise your company will withhold taxes from the proceeds at the required federal withholding rate for supplemental income. However, depending on your income, this minimum withholding may not be enough. If so, you will need to...

Does the tax-withholding rate for supplemental income differ for amounts less than $1 million and for amounts over $1 million?

Depending on the aggregate amount of supplemental income for the year, a two-tier rate applies. The withholding rate for supplemental wages that exceed $1 million in a calendar year is...

UPDATED! What are some year-end strategies for stock options, stock appreciation rights, and restricted stock?

This depends on your financial situation, on whether your decisions should be entirely tax-driven, on what you did earlier in the year, on your outlook for your company's stock price, and on the prospects for changes in tax law during the year ahead. Below we present 10 ideas...

I may leave my company to become a consultant, retire, or take another job. Will taxes still be withheld on my NQSOs, SARs, and/or restricted stock as they were when I was an employee? What if I live in another state when I exercise them?

Most companies base withholding on your employment status at the time of grant, even if...

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