Financial Planning: Year-End Planning

Ten Ideas For Year-End Tax Planning With Stock Compensation

The myStockOptions.com Editorial Team & Contributors
UPDATED FOR 2011! Consider year-end or year-beginning tax planning with your stock options and company stock. While investment objectives, not tax considerations, should generally drive your decisions, here are 10 ideas to review to prevent paying more taxes than necessary.

Year-End Strategies For Restricted Stock: Ideas To Consider

Bruce Brumberg
As part of your year-end and year-beginning tax planning, don't forget to review your holdings in restricted stock, performance shares, and other company stock you may own. This article presents strategies that many experts suggest.

Year-End Strategies For Employee Stock Purchase Plans: Ideas To Consider

Matt Simon
When you think about year-end financial and tax planning, don't forget to review shares acquired through an employee stock purchase plan. This article outlines issues and strategies to contemplate.

In Their Own Words: Financial Advisors On Strategies For Stock Options And Company Stock Holdings At Year-End

myStockOptions.com Editorial Team
UPDATED FOR 2011! Year-end planning can be tricky. We asked five financial advisors for their ideas on planning for year-end 2011 and beyond. Read their responses in their own words.

Stockbrokers' Secrets (Part 3): Year-End Planning For NQSOs, Restricted Stock, And RSUs

W.E.B. Bantling and Michael Beriss
UPDATED FOR 2011! The time for tax planning is before the year ends; tax season is too late. Learn about several year-end ideas that apply to nonqualified stock options (NQSOs) and restricted stock/RSUs. Meanwhile, look ahead at the likelihood of tax rate changes under President Obama.

Stockbrokers' Secrets (Part 7): Year-End Planning For ISOs

W.E.B. Bantling and Michael Beriss
UPDATED FOR 2011! Learn about year-end planning specifically for incentive stock options, including ideas related to the alternative minimum tax.

Stock Option Financial Planning After Your Tax Return Is Filed And At Year-End (Part 1)

Tom Davison and Liam Hurley
UPDATED FOR 2011! The time right after you have completed your tax return is ideal for big-picture financial planning. You can more accurately project your income and likely tax situation for the remainder of this year and the next, including AMT risk and capital-loss carry-forwards, to develop your strategy.

How Tax Rate Changes Impact Your Stock Grant Strategies (Part 1): Nonqualified Stock Options

Stanley Trotta with Robert Gordon
With tax increases possible in the future, 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 1 looks at nonqualified stock options.

The ISO Tax Trap And The AMT Credit Myth: What To Do Before Exercise And At Year-End

Alan Ungar
The tax reductions of the past few years have brought both good and bad news for holders of incentive stock options. While you may have lower capital gains rates when you hold the shares long enough after exercise, it is harder to avoid the risks of the alternative minimum tax (AMT) and to fully recover any AMT credit.

Year-End Tax & Financial-Planning Issues For Employees

Bruce Brumberg, Editor-in-Chief
myStockOptions.com
Updated annually, this presentation (in PDF) provides a timely overview of year-end financial-planning topics for stock compensation, including points of importance for employee education and for financial advisors. Special attention is given to issues involving possible tax-rate increases. While each annual edition features planning concerns specific to that year-end, the general ideas presented here are perennially useful. (Premium and Pro members can view the presentation in PDF from the above link and may request permission to modify it for use and distribution at their companies.)

Tips For Last-Minute Year-End Tax Planning

Eva Rosenberg
MarketWatch
This article offered thoughts on year-end planning at the end of 2010, including some ideas that apply to stock compensation, and it remains useful for planning in 2011 and 2012.

Now Is The Time To Exercise ISOs

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.)

Your Year-End Personal-Finance Checklist

Sue Stevens
Morningstar.com
The end of the year is one of the best times for tax and financial planning, including for stock option exercises. This article offers tips that apply every year. (Free registration is required.)

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UPDATED FOR 2011 What are some year-end strategies for restricted stock and stock options?

This depends on several factors. Below we present 10 ideas...

UPDATED! What impact does the 2010 Tax Relief Act have on stock compensation and financial planning?

The 2010 Tax Relief Act extended the 2010 tax rates through 2012. This FAQ presents eight related planning points for equity compensation...

For NQSOs or SARs exercised on the last business day of 2011, or for restricted stock that vests on that day, is the income taxable in 2011 or 2012?

All exercises with an exercise date in 2011, and all restricted stock with a vesting date in 2011, will be included in 2011 taxes and on your W-2 for 2011, and will count...

At year-end, is there any general way to determine how many ISOs I can exercise and hold before triggering AMT?

One strategy for minimizing AMT is to spread out the exercise of ISOs over...

How do stock grants affect Roth IRA contributions and conversions?

The grant itself has no impact. The compensation income generated from exercise or vesting can affect...

UPDATED! Are there any stock-option strategies for using my capital-loss carry-forwards?

Tax considerations alone should not drive the choice of what stock you sell. For example, if you are holding appreciated company stock from a nonqualified stock option (NQSO) exercise, you will be taxed on any capital gains when you sell it. The capital-loss carry-forward from last year's unused losses can offset these gains, making it less "taxing" to diversify your holdings...

At the end of the year, should I exercise my in-the-money options and sell the stock to take advantage of netting the gains against my short-term capital losses from this year (or those that were carried forward from last year)?

Don't get tripped up by misunderstanding the tax rules. A common mistake is thinking that because you are selling a stock a capital gain lurks somewhere in the tax calculation...

The value of my restricted stock has fallen since vesting. If I sell my shares at year-end, do I get a credit for the income tax I paid at vesting, or do I net the loss against capital gains?

The vesting and the sale are separate transactions and generate different types of income. Unless you made an 83(b) election to be taxed at grant, you were first taxed on the stock's value at vesting, which created ordinary income to you. With restricted stock units (RSUs), taxation occurs...

Will my income from restricted stock vesting be netted against my short-term capital losses from this year (or those that were carried forward from last year)?

The value at vesting is all ordinary income. You have capital gain only for the increase in the stock price after vesting. Only this gain at sale can be...

Are there any strategies for paying estimated taxes on income from stock options and restricted stock?

Estimated-tax periods end on the last days of March, May, August, and December, with payments due by the 15th (or the next business day) of the following month. If you are paying estimated taxes, one strategy is that just after the start of an estimated-tax period you can...

What ISO strategies can help minimize AMT liability?

Experts suggest several strategies for you to consider when you exercise ISOs and are concerned about triggering the alternative minimum tax. For example, near year-end or at the beginning of the year, you can...

I know that my ISO exercises will trigger the AMT for me this year or next. What planning strategies should I use that are related to other tax payments and income?

When you are intermittently subject to the alternative minimum tax (AMT), tax advisors suggest different planning ideas on shifting income and deductions. You have much less flexibility in your planning when you project paying AMT for the next several tax years. Strategies for reducing the likelihood of triggering the AMT, and for minimizing the amount of AMT, are...

When I hold ISO stock, how far must the stock price drop from the market price at exercise for AMT to exceed what my ordinary income tax would be if I sold the shares this year?

Assume that the ISO exercise/hold or other parts of the AMT calculation will trigger AMT. A rule of thumb is...

Earlier in the year, I exercised ISOs, held the stock, and had a big spread from the market price that will trigger AMT. But my company's stock price has dropped below my exercise price. Can I eliminate AMT and even claim a tax loss?

As long as you sell the shares on or before December 31, you will...

Can I rescind a stock option exercise and reverse the tax impact?

Only in very limited circumstances, and your company needs to allow the rescission. The company would...

Is a Section 83(b) election taxing you on the value of restricted stock at grant ever revocable? Can it be rescinded?

The IRS has provided guidance on the limited circumstances in which this is permitted. The Section 83(b) election is irrevocable unless you show...

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