Tax 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.
Market volatility and stock-price declines rattle even the most experienced holders of stock compensation (and their financial advisors). Sooner or later, volatility or downturns may force you to make decisions that affect your financial future and long-term wealth. This article presents topics that I find myself discussing over and over again with my best clients.
Stock options, restricted stock units, and other types of equity compensation are valuable benefits. When the company's stock price becomes a rollercoaster, remember that equity comp is a long-term deal. This article offers expert advice for coping with stock-price volatility.
When markets are on a wild ride, stock volatility can rattle anyone's financial plan for equity comp and company shares. What should you do with shares acquired from equity awards now? Should you change your strategy or ride it out? This article provides a financial planner's insights.
For reasons beyond your control, you may find yourself in a position where you suddenly need to sell stock for cash to meet urgent living expenses. When selling stock you must always proceed with caution. Review this checklist of topics to understand on tax, company, brokerage firm, and SEC rules.
One good thing about employee stock purchase plans (ESPPs) is they can't be "underwater" like stock options. In fact, an ESPP with a discount and a lookback can be a good deal even in down markets. This article explains the unique shelter from volatile and falling stock prices that ESPPs offer.
Whether you are a novice or advanced investor, it can be hard to decide what to do with your company's stock grants. Should you exercise options now or wait? Should you hold company stock at vesting or sell it and reinvest? Behavioral economics and investor psychology offer insights that can help you develop a personally acceptable approach.
You may feel let down by your stock options if your company's stock price has dropped, leaving your options underwater. Getting less than you expected is something that inevitably occurs in a free market, and it is helpful to be prepared for losses as well as gains.
Your option grant terms and the behavior of your company's stock price are only part of your financial-planning story in volatile markets. Equally important is the price movement of what you will buy with the proceeds from an option exercise and stock sale. As this article explains, relative changes in price, not absolute changes, are what matter.
Even when stock prices are volatile, there are still opportunities to achieve gains from stock compensation. This article presents a range of ideas to consider: buying stock now to swap later, exercising and holding ISOs, or making a Section 83(b) election for restricted stock.
Underwater stock options have an exercise price which is greater than the market price of the underlying stock. For various reasons, you do not want to...
Not in the way stock options can. Restricted stock is worth the full market value of the stock when it vests (or, with restricted stock units, when shares are delivered). It does not matter if...
Employee stock purchase plans cannot be "underwater" in the traditional sense of having a purchase price greater than the current stock price. With an ESPP, the market price at the beginning of an offering does not...
The number of companies, and their employees, with underwater stock options has substantially increased, especially since the historic drop of the stock markets in October 2008. Various surveys and corporate examples show that...
While it is too early to know exactly how stock grant practices may change because of impacts from the Covid-19 pandemic in 2020, there are some lessons from what happened in past big market drops...
Wishful thinking! Just as you are not taxed on the value of the options at grant, you may not write off any expired unexercised options, whether underwater or in the money...
An options exchange is an alternative to repricing underwater stock options. Most companies set an exchange ratio of underwater options for new ones at the current market price so that the total value of the new options is equal to that of the previous options. Alternatively...
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...
While stock option exchanges usually do not create tax consequences for participants who are US tax residents, employees who are tax residents of other countries may be taxed when...
Very few companies arrange a straight repricing of outstanding options. Companies concerned about widespread and deeply underwater options may offer...
This depends on the provisions in your stock plan and the structure of the merger or acquisition. According to the flexibility for adjusting outstanding grants that your company's stock plan provides, the buyer can...
When options are exercised, generally the estate or beneficiary is able to take an income tax deduction for the amount of estate taxes already paid by the estate. But when they are not exercised you cannot take the deduction against other income...
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Tax 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.
Want to know more? Listen to our podcasts on the basics of stock options, restricted stock, and ESPPs.
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