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Tax Relief Act's Impact On Stock Compensation And Year-End Planning Analyzed By

Brookline, MA, December 27, 2010 – The long-awaited federal tax rates for 2011 and 2012 were finally established on December 17, when President Barack Obama signed the Tax Relief Act of 2010. The result of a much-discussed compromise between the President and Congress, the new tax law extends the current tax rates for ordinary income, capital gains, and dividends through 2012. In light of this development, immediately released a concise analysis of the impact this extension has on year-end financial and tax planning and on stock compensation. This analysis comes in the form of eight key points presented in a new FAQ on the website.

"With the extension of the current rates, employees will not need to give immediate attention to the question of accelerating income into 2010," observes Bruce Brumberg, the Editor-in-Chief of "The most meaningful new provision is the 2% cut in the Social Security tax rate, from 6.2% to 4.2%. Among other benefits, this has implications for timing the exercise of nonqualified stock options."

The analysis also looks at the new tax law's implications for stock plan design and administration. In addition, the Global Tax Guide at shows global trends in the taxation of equity compensation. "It is important to understand the movement toward tax-rate increases in Europe and elsewhere, particularly for stock-based pay," Mr. Brumberg explains. "These lower tax rates in the US may be short-lived."

The extension of the current tax rates also creates clear advantages in the conversion of a regular IRA to a Roth IRA before the end of 2010. The tax year 2010 is the only year when the taxes stemming from the conversion can be divided between two years (2010 and 2011). Now that the threat of higher income taxes after 2010 is no longer a deterrent, the extension of the current rates makes splitting the taxes a real benefit. For more on Roth IRA conversions and the role stock compensation can play, see the related article series on

For the full analysis and all eight of the key planning points raised by the 2010 tax law, see the FAQ on

Financial-Planning Tools To Help Decision-Making

The extension of the current tax rates goes only through 2012, raising the possibility of tax-rate increases in 2013. In addition to insightful content on financial-planning strategies, including an article series on planning for tax increases, the full suite of financial-planning calculators and modeling tools on can help users explore and compare scenarios involving different future tax rates or company stock prices. Variables can be easily edited for complex modeling. Many financial-planning decisions can be delved:

  • The Quick-Take Calculator For Stock Options can help users compare taking option-exercise gains now versus later.
  • The patented Comparison Modeling Tool for Stock Options helps users decide whether to exercise options now and sell the shares to make alternative investments or whether to wait until later in the term, when the stock price (but also the tax rates) may be higher.
  • The Restricted Stock Modeling Tool helps users decide whether to sell shares immediately at vesting to take advantage of the current 15% capital gains rate or whether to hold the shares into a future that may see a 20% capital gains rate (but also perhaps a higher stock price).

Corporate Licensing Available

All the content on is ideally suited for licensing by companies and stock plan providers for their stock plan participants. A customized version of the website's award-winning content can be seamlessly woven into companies' HR, benefits, and/or compensation portals. Accessible through any internet browser, 24 hours a day, 7 days a week, licensed content from lets stock plan participants answer their own questions about their stock grants whenever they need to learn more—saving time for the stock plan staff and costs for the company. For more information, visit, email, or call 617-734-1979.


With exclusive articles, 750+ FAQs, the Tax Center, Global Tax Guide, an extensive glossary, and interactive tools, is the premier online resource of educational content, tools, and self-study courses on stock options, restricted stock, restricted stock units, performance shares, stock appreciation rights, and employee stock purchase plans. is written and managed by leading experts in equity compensation, and is produced by a company with a long history of successful publications explaining complex legal and financial subjects in plain English.

The influential consumer magazine PC World ranks among "the most useful sites ever" that "deliver top-notch information, support, and services." The accounting journal CPA Wealth Provider selected among companies "that have taken the lead through innovation, efficiency, initiative, or growth in the financial-planning area." The Specialized Information Publishers' Foundation honored MSO Pro with one of its Editorial Excellence Awards in the category of Best Interactive Content among niche publishers. The innovative Comparison Modeling Tool on is now patented. has also received extensive favorable coverage in major publications, including BusinessWeek, The Wall Street Journal, The New York Times, the San Francisco Chronicle, and The Boston Globe, and on CNN, National Public Radio, PBS,, and, the publisher of, has also launched a new website:, the only online educational resource devoted exclusively to nonqualified deferred compensation (NQDC). With clear writing and independent, unbiased expertise, myNQDC provides education about the financial planning, taxation, risk, and legal issues surrounding nonqualified deferred compensation and encourages participants to fully understand these topics and maximize the value of their plans. With tax rates likely to rise in the future, the tax-deferral advantages of NQDC will make these plans increasingly popular.

For more information, please contact Bruce Brumberg and Matt Simon at or 617-734-1979.

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