myStockOptions Updates: Tax Season 2017 (Jan. 25, 2017)
Ready For Tax Season 2017?
Developments over the past few years continue to affect tax-return reporting, which can be complex and difficult for anyone who sold shares from stock comp in 2016. Most notably, a few years ago the rules changed for reporting the cost basis of shares on IRS Form 1099-B. If you do not follow these rules, you will end up overpaying your federal taxes and may draw unwanted attention from the IRS. The fully updated articles and FAQs in the Tax Center at myStockOptions provide crucial guidance. This content includes our popular FAQs with annotated diagrams showing how to report stock sales on Form 8949 and Schedule D of your IRS Form 1040.
How The Trump Presidency And Tax Reform May Affect Stock Compensation
Potential tax reform under the Republican president and the Republican-controlled Congress in 2017 or 2018 may have a meaningful impact on stock compensation. A new article at myStockOptions explains the ways in which these changes may occur and the major issues to follow.
Supreme Court Issues A Major Decision On Insider Trading And Tipping
Like insider trading, insider tipping is illegal. In its ruling on the case Salman v. United States, the Supreme Court makes it clear that whenever a friend or relative is tipped, insider trading has occurred, regardless of whether the tipster receives a benefit. In the court's view, "the tipper personally benefits because giving a gift of trading information to a trading relative is the same thing as trading by the tipper followed by a gift of the proceeds." The tipper does not need to receive something of a "pecuniary or similarly valuable nature" in exchange for this gift to a trading relative. For details on this topic, see the FAQs and articles at myStockOptions on insider trading and tipping and on Rule 10b5-1 trading plans.
State Supreme Court Confirms You Cannot Escape State Taxes By Moving Away
A recent court ruling shows that you cannot escape state taxation of vested stock options by moving to a state without an income tax. In Allen v. Commissioner of Revenue Services, the Connecticut Supreme Court confirmed that Connecticut can tax income from option exercises by a nonresident if the options were granted as compensation for performing services within the state. Connecticut, like many states, has a provision that authorizes the taxation of income "derived from or connected with sources within this state of each nonresident." As FAQs at myStockOptions explain, the taxation of mobile employees in the US and in other countries shows the eagerness of governments to find tax revenue in stock compensation.
Additions And Updates In The Global Tax Guide For Internationally Mobile Employees
The Global Tax Guide at myStockOptions covers the taxation of equity compensation in 40 countries on six continents. Recently we added guides on Egypt and Turkey. Important updates have occurred in other country guides:
- France: The broad Macron Law, enacted by France in 2015, reduced the required minimum vesting and share-holding periods that confer favorable tax treatment on employees with qualified RSUs. However, for shares acquired from grants made after December 31, 2016, gains above €300,000 in any given tax year are taxed as salary rather than capital gains (i.e. at higher rates). For details, see the France country guide.
- Chile: The taxation of stock options in Chile has been clarified. Stock option grants made on or after January 1, 2017, are taxed at both grant and exercise. See the Chile country guide for details.
Other countries where tax developments affecting stock compensation have occurred are indicated in the Global Tax Guide.
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