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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.


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Tax Planning For Options, Restricted Stock, And ESPPs After 2013 Tax Law Changes: High-Income Taxpayers Impacted Most (Part 1)

Tom Davison and William Whitaker
The beginning of 2013 brought notable shifts in tax rates for people at higher income levels. Part 1 surveys the important tax changes and considers their impact on planning.

American Taxpayer Relief Act And Medicare Surtax: Impact On Stock Option And Restricted Stock Strategies This is premium content

Alan B. Ungar
Podcast included! The American Taxpayer Relief Act and the Affordable Care Act introduced tax-rate increases you must consider in deciding when to exercise stock options, when to sell company shares, and how to plan around income from restricted stock/RSU vesting.

ISOs And Wash Sales: A Trap Within A Trap

Kaye Thomas
A trap awaits those who, after selling shares from exercised ISOs to avoid AMT, want to buy back the stock.

Taking An Overseas Assignment: Stock Compensation For Internationally Mobile Employees (Part 1) This is premium content

Mark Miller
Podcast included! Taxation for internationally mobile employees can be extremely complex. Part 1 introduces the key cross-border topics you must know about equity compensation, including the sourcing and apportioning of income.

Taking An Overseas Assignment: Stock Compensation For Internationally Mobile Employees (Part 2) This is premium content

Mark Miller
Podcast included! Taxation for internationally mobile employees can be extremely complex. Part 2 looks at specific scenarios, withholding taxes, and tax equalization.

Hedging Your ISO Stock This is premium content

Robert Gordon and Charlotte Lyman
Podcast included! 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.

Final ISO Regulations Affect Stock Plan Design, Optionholders, And Advisors (Part 1)

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.

Final ISO Regulations Affect Stock Plan Design, Optionholders, And Advisors (Part 2)

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.

Early-Exercise ISOs Complicated By Final IRS Regulations This is premium content

Michael Frank
The IRS has issued final regulations on ISOs. Understand how these final regulations increase the risks of early exercise.

How To Avoid Paying Too Much Tax: Understanding The Revised Form 1099-B And Form 8949 For Reporting Stock Sales On Your Tax Return This is premium content

Bruce Brumberg
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.

VIDEO! Tax-Return Forms & Reporting Rules For Stock Sales

Bruce Brumberg
Learn how to prevent costly tax return mistakes with this animated presentation on IRS Form 1099-B, IRS Form 8949, and Schedule D.

How To Report Sales Of Company Stock On Your Tax Return

The myStockOptions.com Tax Team
Learn how to report sales of stock on your tax return. Annotated diagrams of Form 8949 and Schedule D help you make sense of the reporting rules.

Avoid Tax-Return Mistakes With Stock Options & ESPPs: What You Need To Know

Bruce Brumberg and Lynnette Khalfani
UPDATES! The 2015 tax-return season has the potential to be more confusing than most if you sold stock in 2014. Read this article for tips on reporting stock sales and on other crucial tax-return topics.

ISOs: Tax-Return Tips And Traps This is premium content

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.

How Tax Rate Changes Impact Your Stock Grant Strategies (Part 3): Incentive Stock Options This is premium content

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? Part 3 looks at incentive stock options.

Stockbrokers' Secrets: Year-End Planning For ISOs This is premium content

W.E.B. Bantling and Michael Beriss
UPDATES! Learn about year-end planning for incentive stock options. This article includes ideas related to the alternative minimum tax.

Keep Your Eyes On The Calendar

Robert Gordon
Investment News
Before the end of the year, review any ISO stock you are holding from earlier exercises and consider strategies for the following year. This article offers tips that apply every year. (Registration is required.)

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UPDATES! What are some year-end strategies for restricted stock, RSUs, and stock options? This is premium content

Decisions in year-end financial and tax planning depend on several factors. In this FAQ, we present several situations and some strategies that many experts suggest. Of course, you should...

How will my broker know which shares to sell? Should I identify them in some way? This is premium content

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...

UPDATES! What happens if I live in state A when my stock options are granted, state B when I perform some of my services, state C when I exercise the options, and state D when I sell the shares? This is premium content

Generally, each state you live in determines what income is taxable and when. For administrative ease, many companies...

How do I use stock that I own to exercise an option in a stock swap? What is the tax treatment? This is premium content

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...

Can I use ISO stock to exercise NQSOs? Is this a disqualifying disposition that eliminates the special tax treatment for ISOs? This is premium content

Yes, you can use ISO stock to exercise NQSOs without disqualifying it, as the...

When I take an international assignment, will taxes on my stock compensation be equalized? This is premium content

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...

UPDATES! What tax statement will I receive from my broker after a sale of company stock I acquired by stock option exercise, restricted stock vesting, or ESPP purchase? This is premium content

You will need to gather certain information to complete your tax return. The broker will send you IRS Form 1099-B for the proceeds...

What are the biggest mistakes related to stock options I can make on my tax return, and how can I avoid them? This is premium content

It is all too easy to make costly tax-return errors that attract unwanted IRS attention. Learn how to prevent mistakes...

Form 8949 and Sch. D diagrams! After I have met the ISO holding periods, how do I report a sale on my tax return? This is premium content

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...

Form 8949 and Sch. D diagrams! I did a cashless exercise with my incentive stock options. With no additional gains, how do I report this on Form 8949 and Schedule D? And what about the alternative minimum tax? This is premium content

By selling the ISO stock when you exercised it, you eliminated the spread at exercise from the...

Form 8949 and Sch. D diagrams! How do I report a sale of shares in an ISO sell-to-cover exercise? This is premium content

To report the sale of shares in a sell-to-cover exercise, you complete Form 8949 along with Schedule D for the year of...

Form 8949 and Sch. D diagrams! How am I taxed if I have made a disqualifying disposition (e.g. sale) of ISO shares in a different year than the year I exercised the option? How do I report this? This is premium content

The rules are similar to those that apply to sales of ISO shares made in the same year as exercise; however, the difference is...

Form 8949 and Sch. D diagrams! I exercised my ISOs and sold the ISO stock later in the same year. How is this reported on my tax return when the stock price at sale was higher or lower than at exercise? This is premium content

The calculation of the amount of ordinary income and capital gain/loss will vary according to the...

Form 8949 and Sch. D diagrams! When I sell my ISO shares in a disqualifying disposition, will the broker's commission reduce the amount of ordinary income on my W-2 or the amount of gross sales proceeds on my Form 8949 and Schedule D? This is premium content

The final IRS/Treasury regulations on ISOs clarify that the amount of ordinary income in a disqualifying disposition is...

What are the big changes in 2015 with reporting stock sales on my tax return? Why have these changes occurred?

Major changes have occurred in the tax reporting for stock sales during the past few years, making accurate tax-return reporting more complex and difficult...

UPDATES! How have IRS Form 1099-B and cost-basis reporting changed for sales of stock acquired from my stock options, restricted stock, or ESPP? What do I need to do differently because of the changes? This is premium content

If you sold shares during the calendar year, your brokerage firm will issue IRS Form 1099-B by mid-February of the following year. This is an important document that you must have to complete your tax return for the year of sale...

In the cost basis I use to report sales of company stock on my tax return, what part comprises the W-2 income from stock compensation or an ESPP? This is premium content

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...

UPDATES! What if the wrong cost basis is reported on my 1099-B? How do I report the right cost basis on Form 8949 of my tax return? This is premium content

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...

The amount of my spread at exercise was not listed on the W-2 that I received from my company, even though I made a disqualifying disposition. Do I report this gain on my tax return, and how will I be taxed? This is premium content

This type of situation, in which the disqualifying disposition does not appear on the W-2, is more likely to occur when...

I acquired stock from option exercises and restricted stock vesting a few years ago. When I sell the stock, how do I rediscover the cost basis for my tax return? This is premium content

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

In what ways can I pay my taxes if I don't have the money to pay them with my tax return?

If you simply lack the funds to pay your income tax, you may want to apply for a payment agreement on the...

Can the IRS seize stock options or restricted stock under a tax lien? This is premium content

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...

Even though no withholding is required for ISOs, can I still pay the federal and state taxes when I make a cashless exercise? This is premium content

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...

What is the tax impact on me if my company modifies outstanding stock options or SARs, such as by extending the option term? This is premium content

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...

Is the gifting or donation of stock that I acquired from an ISO exercise or ESPP purchase a disqualifying disposition? What is the tax treatment for early sale? This is premium content

A disqualifying disposition occurs if you sell, transfer, exchange, gift, or donate the stock that you acquired without...

Both dividends and long-term capital gains are now taxed at the same rate. Can I net my dividends from my company stock against capital loss from the sale of company stock or another security? This is premium content

Although qualified dividends are taxed at the...

The spread on my cashless ISO exercise is reported on my W-2 as ordinary income. Can I use my stock-trading losses to offset this income? This is premium content

The tax law says that you can offset losses against only the same type of income...

Is all the income that results from a disqualifying disposition of ISO shares a short-term capital gain that I can net against my capital losses on my tax return? This is premium content

No. All or part of it may be ordinary income. You have capital gains only when you...

My company backdated more stock options than just those of the senior executives. How does this affect employees like me and the taxation of my stock grants?

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...

If I were to sell my stock immediately upon exercise or at vesting, the transaction would violate the insider-trading laws and the laws of short-swing profits under Section 16(b) because I had a purchase within six months of the sale. Would this then delay the date of the tax treatment? This is premium content

The spread at exercise is what matters for the tax calculation...

Is writing call options on, or buying put options for, my ISO stock a disqualifying disposition? This is premium content

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...

If I move to another country to work, will I still have to pay US taxes on option exercises, restricted stock vesting, and stock sales? Can I avoid double taxation? This is premium content

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...

What is the tax treatment of ISOs after death? This is premium content

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...

I exercised ISOs and am hoping to wait 12 months before selling to get the favorable ISO tax treatment. What happens in a cash M&A deal when I'm trying for the one-year holding-period mark but the buyer pays cash for the stock? Is there any way around incurring a disqualifying disposition? This is premium content

If, as is normally the case, you have no power to refuse or delay your stock sale, no exception...

Does the accelerated vesting of my stock options, restricted stock, and/or performance shares in a change of control or termination have any tax impact on me, such as for ISOs and golden parachute payments? This is premium content

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...

UPDATES! Will my company be able to take a tax deduction for the value of my restricted stock, restricted stock units, performance shares, or stock options if my compensation already exceeds $1 million? This is premium content

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...

UPDATES! Are my stock grants affected by the rules of deferred compensation under IRC Section 409A? This is premium content

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...

My company's stock is now essentially worthless because of securities fraud by senior executives. Can I claim a casualty or theft loss on my tax return? This is premium content

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...

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