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Basics

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

Learn core knowledge about stock grants. Browse an overview of this section below, or explore the subtopics to the left. This section covers basic concepts that apply not just to stock options but also to restricted stock and restricted stock units. See also the Tax Center for special sections just on the tax basics of various equity grants.

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

Selected Articles

Core Concepts

Stock Options 101: The Essentials

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.
Core Concepts

Restricted Stock 101: Five Essentials Of Restricted Stock & RSUs This is premium content

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.
Core Concepts

ESPPs 101: Key Dates And Terms You Must Know

Your employee stock purchase plan (ESPP) may be one of the best benefits your company offers. However, to maximize its value, you must know its key dates and terms. This article explains the basics you need to know for your ESPP participation.
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Benefits

NEW! 10 Ways Stock Compensation Can Make You Happier

Stock compensation, if fully appreciated and understood, can improve happiness. Based on the author's own observations, the 10 points in this article show how.
Core Concepts

Stock Appreciation Rights 101 (Part 1)

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.
Core Concepts

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

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.
This is simply a selection of the many articles in this section.
Use the navigation to the left to explore all of the categories in this section.

Selected FAQs

Core Concepts

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...
Core Concepts

What is an employee stock option?

Generally, an employee stock option is a right that a corporation grants...
Core Concepts

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

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

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...
Core Concepts

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...
Core Concepts

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...
Core Concepts

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...
Exercise

How is my stock option's exercise price set? This is premium content

The full board of directors, the compensation committee, or an executive with expressly delegated authority...
Vesting

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...
Exercise

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...
This is simply a selection of the many FAQs in this section.
Use the navigation to the left to explore all of the categories in this section.