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Articles

My Company Is Being Acquired: What Happens To My Stock Options? (Part 3, Taxes)

Richard Lintermans

Part 1 looked at the importance of your option grant terms. Part 2 examined the acquisition's terms and the valuation of your company. Now let's look at the tax treatment.

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

myStockOptions.com Editorial Staff & Contributors

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.

FAQs

What is the tax treatment of my restricted stock in an acquisition?

This depends on how grants of restricted stock or RSUs are treated under the terms of the acquisition or merger. For example, if the vesting is accelerated, then you will be...

What is the tax treatment of my stock options in an acquisition?

This depends on how stock options are treated under the terms of the deal. For example, if you are receiving for your options...

What is the tax treatment of my ESPP stock in an acquisition?

This depends on how your company's stock is treated under the terms of the acquisition or merger...

Show More FAQs (7 more)

How can tax consequences to the buying and selling of companies in an acquisition affect the treatment of my stock options?

The buyer and seller may try to structure the transaction so that one company...

Does the accelerated vesting of my stock options, restricted stock, and/or performance shares in a change of control or termination have any tax impact on me, such as for ISOs and golden parachute payments?

With stock grants of normal size, you face no tax impact beyond the standard tax treatment. ISOs may be converted to NQSOs should any acceleration of vesting cause...

I have an earnout or installment payment of additional shares because my company met performance goals. How are these additional shares taxed?

This structure is more common in acquisitions of private companies or small public companies than in acquisitions of big public companies. Since the grant of the additional shares is tied to performance, the value is taxed as...

In an upcoming merger, the acquirer will pay cash for my outstanding NQSOs and ISOs. Can I avoid some of the Social Security and Medicare taxes by exercising vested options now?

When stock options are bought by the acquirer without any exercise, the resulting gain is treated as...

Can the annual limit of $100,000 in exercisable ISOs be adversely affected by any post-grant events, such as job termination or the acceleration of vesting in a merger?

One barrier to maintaining ISO status is any acceleration of your vesting that causes more than $100,000 of the grant's value to be first exercisable in...

What if my company is acquired while I'm trying to meet the one-year holding period for ISO shares but the buyer pays cash for the stock before the holding period is over? Is there any way to avoid a disqualifying disposition?

If, as is normally the case, you have no power to refuse or delay your stock sale, no exception...

What if my company is acquired while I am trying to meet the one-year holding period for ESPP shares but the buyer pays cash for the stock before the holding period is over? Is there any way to avoid a disqualifying disposition?

Assuming you have no power to refuse or delay your stock sale for cash, there is...