Financial Planning
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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Financial Planning - High Net Worth

Financial Planning › High Net Worth


Concentrated Company Stock Positions: How Financial-Planning Strategies Can Manage Risk This is premium content

If you have equity comp, your investment in the single stock of your company can pile up quickly. That's risky, but for various reasons diversification may not be easy. This article presents guidance on mitigating concentration risk from experts in that financial-planning niche.

The Equity Compensation Planning Dilemma For Corporate Executives This is premium content

Podcast included! Executives must carefully balance the demands of many constituencies interested in their company's stock. Explores ways to manage these pressures while achieving financial goals.

Strategies For Hedging Concentrated Stock Positions (Part 1) This is premium content

Podcast included! Your company stock represents a large, concentrated portion of your wealth, making you nervous. You want to protect your gains and get your hands on some money.
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NEW! How 10b5-1 Plans Can Help You Build Wealth And Avoid Insider Trading With Your Company Stock This is premium content

Executives and key employees with equity comp must sell company shares to meet financial goals but also need to avoid insider trading. A prearranged Rule 10b5-1 trading plan for automatic, periodic buying and selling can offer protection. This article has insights from experts on how to use these plans safely and effectively.

Hedging Your Employee Stock Options (Part 1) This is premium content

Podcast included! Understand the key issues and limits of hedging NQSOs, including company, SEC, and tax law constraints. Then you can analyze potential hedging strategies for your stock options, such as collars.

Estate Tax Planning For Large Company Stock Holdings: Four Tips For Using Record-High Lifetime Exemptions This is premium content

Due to annual inflation-indexing, the historically high lifetime exemption amount for gift, estate, and generation-skipping transfer taxes increased in 2023. High-net-worth people who have not yet made gifts, such as gifts of company shares, to use their lifetime exemption may wish to think about lifetime gift strategies to execute this year. This article, by an attorney with extensive experience in estate planning, discusses ideas to consider.

International Equity Awards And Company Stock: The Confusing World Of IRS Reporting For Overseas Assets And Income This is premium content

UPDATES! For US taxpayers with overseas assets and/or income, the reporting rules are complicated, and mistakes can lead to costly penalties. This article summarizes some of the most important reporting rules.

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

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.

Living And Working In Multiple States: Challenges For Mobile Employees In The USA This is premium content

Podcast included! Moving between US states, whether to relocate permanently, travel for business, or retire, can involve tax complications for people who have stock compensation. This article presents the tax issues that you may encounter when you leave your home office and cross a state line.

A Least-Regret Analysis For Equity Compensation: Maximizing Value While Minimizing Risk This is premium content

Podcast included! For some employees, the value of their equity compensation plans represents their largest investment. With so much at stake, making the right decisions is critical. Intelligent planning can maximize value while minimizing risk.

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

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

10 Compliance Concerns That Executives Must Understand To Prevent SEC, IRS, And Corporate Problems (Part 2) This is premium content

Podcast included! All publicly traded companies face the risk that an executive or employee may violate corporate, tax, or securities laws. This article series outlines practices for executives to help them avoid compliance problems, and explains the possible penalties of noncompliance. Part 2 presents issues involving foreign financial interests, nonresident state tax returns, retirement plan funding, company rules, and more.

The Alternative Minimum Tax Sweet Spot: Planning Opportunities This is premium content

If you must pay the alternative minimum tax (AMT), the best move may be to increase income and pay even more AMT! Find out why by reading this surprising analysis.

Tax Strategies With Stock Options, Restricted Stock, And Deferred Compensation This is premium content

Having both nonqualified stock options and nonqualified deferred compensation gives you a tremendous amount of flexibility to optimize your financial planning and tax situation. In this article, I explain how I have used the two plans in concert with one another.

Foreign Executives Transferring To The United States: Tax-Planning Strategies For Equity Compensation This is premium content

Some significant tax and estate-planning opportunities—and traps—exist for foreign executives who come to the United States to work (and when they leave too). This article outlines the principal areas of concern.

Options For Your Options: Generating Income From Your Vested Employee Stock Options Without Exercising This is premium content

If the majority of your net worth lies in unexercised stock options or company stock, it may make sense to sell a portion to reduce the concentration risk while holding on to a portion to participate in future appreciation. However, if most financial goals can be reached without these proceeds and your position is not heavily concentrated, other strategies are worth exploring. One that is gaining popularity is writing call options on vested ESOs to generate some income.

Hedging Your Employee Stock Options (Part 2) This is premium content

Podcast included! Market volatility has made many high-net-worth executives want to hedge their exposure to concentrated positions in company stock. Unfortunately, most of the tools for hedging are not very efficient with NQSOs. Part 2 in this series examines alternative approaches.

Hedging Your Employee Stock Options (Part 3) This is premium content

Podcast included! A regulatory change in 2009 by the SEC now lets unexercised employee options act as collateral for listed publicly traded options. Learn about the rules, possibilities, and limits of this technique.

Strategies For Hedging Concentrated Stock Positions (Part 2) This is premium content

Podcast included! After understanding hedging basics, you need to answer a few questions and decide whether your goals go beyond risk reduction to liquidity creation.

Strategies For Hedging Concentrated Stock Positions (Part 3) This is premium content

Podcast included! After learning the basic rules and restrictions, you now need to decide on the appropriate hedging tool and understand variable forwards and the final issues to consider in crafting your hedging strategy.

Converting Your Stock Option Spread Into Nonqualified Deferred Compensation This is premium content

UPDATED! You may have employee stock options with a large spread but don't need the money, and you may want to defer the tax upon exercise as long as possible. But you also want to minimize your risk of owning a single stock. Learn about the possibility of substituting a nonqualified deferred compensation plan for your unexercised options.

Hedging Your ISO Stock This is premium content

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.

UPDATES! Techniques To Defer Or Eliminate Taxes On The Sale Of Your Company's Shares (Part 1): QSB Stock This is premium content

UPDATES! Finding legal techniques to minimize taxes is almost as popular in the US as stock compensation. These sophisticated techniques with founder's stock and options can defer or reduce taxes. Qualified small business stock (QSBS) is the most famous.

Techniques To Defer Or Eliminate Taxes On The Sale Of Your Company's Shares (Part 2): SSBICs This is premium content

UPDATES! You want to defer gain on the sale of publicly traded securities, but they do not qualify as qualified small business (QSB) stock. Here's another way to defer tax on those holdings.

The Highest-Paid CEOs

The New York Times
This interactive article presents the compensation and wealth accumulation of CEOs at many large companies. The figures, including the value of stock and options awards, are calculated from companies' proxy statements.

IRS Guide To Auditing Techniques For Stock-Based Compensation

The IRS tips its hand on what its agents look for in audits related to all types of stock pay to ensure compliance, whether by corporations or executives.

IRS Nonqualified Deferred Compensation Audit Techniques Guide

Revised in June 2021, this IRS manual summarizes the taxation of nonqualified deferred compensation, which can include certain types of equity awards, and identifies hot spots for IRS review. For more about nonqualified deferred compensation, see our sibling website


What is a concentrated stock position, what are the risks, and what can I do to protect myself and get cash for other purposes? This is premium content

A concentrated stock position occurs when a significant chunk of your net worth is tied up in a single stock. Strategies for hedging, diversification, and liquidity include...

NEW! What are some common strategies for managing risk in a concentrated stock position? This is premium content

While you should seek advice about your situation from an experienced financial and tax advisor, strategies include the approaches discussed here and conveniently summarized in two tables...

Can my company set ownership guidelines for company stock? Any survey data about their use? This is premium content

Stock ownership guidelines specify how much company stock you must own in total or as a multiple of salary. Most companies count in the calculation the...
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UPDATES! Has the likelihood of a tax audit increased for people with equity compensation? This is premium content

Yes, significantly. In addition, fluctuations of income, which can be caused by stock compensation, are a red flag that can trigger an audit. According to research...

How did the 2018 tax reforms affect stock compensation?

In effect from the start of 2018, the Tax Cuts & Jobs Act has provisions that directly and indirectly affect stock compensation...

If my company requires me to have a foreign bank or brokerage account because of the stock plan, what do I need to know about the FBAR and FATCA reporting rules? This is premium content

Under the FBAR and FATCA rules, you may have special IRS reporting requirements if you hold assets in a bank outside the US. This FAQ explains the requirements and the severe penalties that the IRS imposes for noncompliance...

What is backup withholding? How do I prevent it or recover it? This is premium content

Backup withholding is a form of tax withholding on income from stock sales, along with interest income, dividends, or other payments that are reported on...

How does a non-US resident reclaim US backup withholding? This is premium content

If you are a nonresident alien and do not complete and file Form W-8BEN with the IRS upon receiving stock-sale proceeds, such as those stemming from equity awards, your brokerage firm will assess backup withholding on the proceeds. To reclaim backup withholding, take the following steps...

UPDATES! Can my company require me to retain a certain amount of company stock from a stock option exercise or a restricted stock grant? This is premium content

Although stock ownership guidelines are more common, retention mandates and requirements for CEOs and senior executives have become popular, as shown by survey data and corporate proxy statement disclosures. Supporters of share retention rules believe they show...

UPDATES! Do companies grant stock options or restricted stock to directors? Any survey data on director grants? This is premium content

Directors of large public companies are often paid in equity awards as well as in cash, though with a different incentive strategy than in the stock comp granted to senior executives. Surveys by research and consulting firms show corporate trends...

With stock options, what do the terms "intrinsic value" and "time value" mean? How do these concepts apply to financial planning? This is premium content

The value of an option consists of two elements: time premium and intrinsic value. Intrinsic value is the difference...

When I take an international assignment, can 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...

What are the risks of borrowing money from my company to exercise options, purchase restricted stock, or pay the related taxes? This is premium content

If the company's stock price goes up and you remain employed with the company, you can benefit handsomely from this leverage technique. On the other hand, if the company's stock price falls, or if the company's stock price is volatile, the strategy may be risky and can even prove disastrous...

What are margin loans? Can company stock be used as collateral? This is premium content

Brokers are allowed by Regulation T of the Federal Reserve to lend up to 50% of a stock's market price on the day of the loan...

What is a Rule 10b5-1 trading plan?

SEC Rule 10b5-1 provides a defense against charges of insider trading if you later trade stock while you know confidential, important information about your company. A Rule 10b5-1 trading plan is a program for the preset purchase and/or sale of your stock that meets the requirements of this SEC rule, including the need to...

Can I put NQSOs or company stock into a charitable remainder trust or a grantor-retained annuity trust? This is premium content

Your estate-planning opportunities are more effective with company stock than with options. As a general rule, the contribution of the stock options themselves to a CRT is rather...

Can stock options and restricted stock be transferred or gifted to people or charities after I get them? This is premium content

Most stock plans do not permit this for stock options or restricted stock during your life (i.e. transferable only at death), or they allow it only...

UPDATES! How does a clawback work to take away gains from my equity compensation?

A clawback provision can appear in your employment agreement, stock grant agreement, or stock plan. If it is triggered, you must surrender to the company...

How common are clawback provisions? Any survey data about their use? This is premium content

Clawback forfeiture provisions usually do not appear in stock plans. Typically, they are included in stock grant agreements, which tend to be not publicly available. This makes data on clawbacks hard to find. However, a survey...

What is the tax impact of having a clawback in my grant? What if my company claws back the gains? This is premium content

The tax treatment that applies when you have a clawback provision or when a clawback is enforced is an evolving area that is gradually being clarified...

How do I use public resources to research a company's stock compensation practices, the grants it is making, and the holdings of its executives? This is premium content

One resource is the SEC's website. There you can search on the SEC's EDGAR system for the filings discussed below. Another resource is the...

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 and interpretations that may affect your stock grants occur in...

Can I use my vested employee stock options as collateral for selling call options on my company stock? This is premium content

It has become easier to sell call options on your vested employee stock options. This creates both an income-producing opportunity and a hedging strategy, if you are allowed to do this and you understand the risks...

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

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

Are senior executives and directors banned from trading company stock during a 401(k) blackout period? This is premium content

During any 401(k) blackout period, directors and executive officers...

Can I sell my company stock through a blind trust, or another type of trust, as a defense against insider trading? This is premium content

Using a blind trust goes beyond the protections of Rule 10b5-1 plans, yet has more restrictions. These are irrevocable grantor trusts with...

If I enter into a hedging transaction in my company stock, as a senior executive do I need to report this to the SEC on Form 4? Can I be banned from hedging? This is premium content

The SEC's Division of Enforcement has been investigating executives' reporting of certain derivative securities transactions. When you enter into a hedging type of transaction, such as collars or prepaid variable forward contracts, you need to...

If I hedge my company stock (for example, by selling calls on it), will the dividends get the favorable tax rate for qualified dividends? This is premium content

This depends on the approach you take. For most taxpayers, qualified dividends are taxed at a top rate of...

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...

Is my company's tax deduction limited for the value of my restricted stock, restricted stock units, performance shares, or stock options if my compensation exceeds $1 million? This is premium content

Section 162(m) of the tax code limits a public company's deduction for each "covered employee" in the year of income recognition to $1 million. In 2018, the Tax Cuts & Jobs Act (TCJA) eliminated...

What is a "reload" or "restoration" option? How common are they in stock plans? This is premium content

This is a special feature included in a stock option at the time of grant. It provides for...

Is it possible to defer the gains on an NQSO exercise by having the shares delivered in a later tax year? This is premium content

Under a limited number of stock plans, it used to be possible to defer delivery of shares, and related taxes, to some time after exercise or vesting. However, under Section 409A of the Internal Revenue Code, this type of deferred compensation is...

Can my company lend me money to buy its stock, exercise an option grant, or pay taxes on restricted stock at vesting? Can it later cancel or modify that debt? This is premium content

Yes, but the arrangement must be carefully structured not to be considered a stock option or nonrecourse loan...

Do federal securities laws impose any reporting requirements on a public company's officers, directors, and significant stockholders? This is premium content

Yes. Section 16(a) of the Securities Exchange Act of 1934 provides that every person who is a director or executive officer (or a 10% beneficial owner) of a public company must file periodic reports of stock ownership with the SEC...

If I must disgorge short-swing profits under Section 16(b), do I still have to pay tax on those profits? Do I get a tax deduction for the disgorgement? This is premium content

Having recoverable profits under Section 16(b) for a matching purchase or sale within six months does not mean that you will report the same amount as income for taxes. You calculate the profits under Section 16(b) differently...

Can I sell my options to a family trust or a family partnership to defer taxes? Are there other strategies to defer the gain on nonqualified stock options other than the deferred delivery of the shares? This is premium content

Be very careful, as IRS actions and new rules have essentially shut down the use of these techniques. Before recent developments, some tax planners advised...

As a director, can I elect to take part of my retainer as deferred stock units? This is premium content

Receiving deferred stock units, or RSUs that let you delay the delivery of shares (and thus taxes) at vesting, depends on...

Does the US impose an exit tax on citizens who leave the country and give up their citizenship? This is premium content

Yes, but it depends on your income and financial net worth. Under IRC Section 877A, an expatriation tax applies to US citizens who...
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