1st QUARTER 2013

TAX CENTER

OTHER SECTIONS

GLOBAL TAX GUIDE: Major updates in Canada, France, Singapore, Spain, the United Kingdom, and others

GLOSSARY: Antidilution Provision, Net Investment Income Tax (NIIT), and more

ASK THE EXPERTS: Selected questions from Premium Members of myStockOptions.com

NONQUALIFIED DEFERRED COMPENSATION: The latest major updates and additions at our sister website myNQDC.com.


TAX CENTER

Editor's Note: Along with the additions and updates below, we comprehensivly updated all of our tax return content for the 2013 tax season, including our popular annotated diagrams of Form 8949 and Schedule D in the section Reporting Company Stock Sales. The amount of updated tax-return content is too great to present in list form here.

NEW! New Tax Act And Medicare Surtax: Impact On Stock Option And Restricted Stock Strategies

Stock Option Financial Planning After Your Tax Return Is Filed And At Year-End (Parts 1 and 2)

NEW! What tax changes under the American Taxpayer Relief Act affect stock compensation?

NEW! How have the withholding taxes on my equity compensation changed in 2013?

NEW! How does the health-care reform law affect my Medicare tax and stock compensation planning?

NEW! How does a non-US resident reclaim US backup withholding? Any example?

NEW! If I donate stock that has met the holding periods for Section 423 ESPPs, what is the tax treatment?

What are capital gains and capital losses? What are the capital gains tax rates?

What are the federal tax-withholding rates on stock compensation? Is the rate different for amounts above $1 million?

Has recent legislation changed the taxation of incentive stock options?

What is a "substantial risk of forfeiture" and how does it affect the taxation of restricted stock?

When I file an extension to complete my tax return after the IRS deadline, are there any mistakes I should avoid that involve stock grant income?

If I move to another country to work, will I still have to pay US taxes on option exercises, restricted stock vesting, and stock sales? Can I avoid double taxation?

After I exercise NQSOs, will I need to make estimated tax payments?

When my restricted stock vests, will I need to make estimated tax payments?

If I exercise ISOs and hold the stock (triggering AMT for the spread) or sell the stock in a disqualifying disposition, will I need to make estimated tax payments?

Are there any strategies for paying estimated taxes on income from stock options and restricted stock?

If I exercise stock appreciation rights (SARs), will I need to make estimated tax payments?

Has the likelihood of a tax audit increased?

What is the tax deduction for donations of my company stock?

If I gift stock that has met the holding periods for Section 423 ESPPs, what is the tax treatment?

What is a "substantial risk of forfeiture" and how does it affect the taxation of restricted stock?

What is the tax impact on me if my company modifies outstanding stock options or SARs, such as by extending the option term?

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OTHER SECTIONS

Basics

What is "capital gain"? Have recent tax laws changed the capital gains tax rates?

How common are stock options, restricted stock, performance shares, and ESPPs outside the US? Do surveys show trends?

Does the IRS have any rules on setting exercise prices?

How do I use stock that I own to exercise an option in a stock swap? What is the tax treatment?

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Restricted Stock, RSUs, & Performance Shares

NEW! New Tax Act And Medicare Surtax: Impact On Stock Option And Restricted Stock Strategies

What is a "substantial risk of forfeiture" and how does it affect the taxation of restricted stock?

How does a dividend affect the value of stock options, restricted stock, and restricted stock units?

Do I get dividends with restricted stock units (RSUs)? How are they taxed?

When my restricted stock vests, will I need to make estimated tax payments?

Are there any strategies for paying estimated taxes on income from stock options and restricted stock?

With restricted stock units and performance shares, can I defer the delivery of the shares at vesting? How is this taxed?

How is restricted stock handled in divorce? Who pays taxes when restricted stock or vested company shares are transferred in a divorce settlement?

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NQSOs

NEW! New Tax Act And Medicare Surtax: Impact On Stock Option And Restricted Stock Strategies

Are there financial-planning strategies for NQSOs?

How does my employer calculate the amount of withholding due at the exercise of a nonqualified stock option?

Is the spread at exercise of a nonqualified stock option subject to Social Security taxes?

My new company withheld Social Security tax from my wages even though I "maxed out" on these taxes this year from my stock option exercise and restricted stock vesting at my prior employer. Can I get a refund or a credit on my tax return?

After I exercise NQSOs, will I need to make estimated tax payments?

Are there any strategies for paying estimated taxes on income from stock options and restricted stock?

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ISOs & AMT

NEW! New Tax Act And Medicare Surtax: Impact On Stock Option And Restricted Stock Strategies

Dr. Strange Tax, Or: How I Learned To Stop Worrying And Love The AMT

Are there guidelines for calculating AMT trigger points? For example, if my spouse and I earn $100,000, will we trigger the AMT when I exercise ISOs?

Has recent legislation changed the taxation of incentive stock options?

What are the tax consequences of exercising an ISO?

How am I taxed if I make a disqualifying disposition (e.g. sale) of ISO shares in the year I exercised the option?

What ISO strategies can help minimize AMT liability?

If I exercise ISOs and hold the stock (triggering AMT for the spread) or sell the stock in a disqualifying disposition, will I need to make estimated tax payments?

In general, how does the alternative minimum tax (AMT) calculation work?

What is the latest news from Congress about legislation relating to the alternative minimum tax?

Is writing call options on, or buying put options for, my ISO stock a disqualifying disposition?

Is the gifting or donation of stock that I acquired from an ISO exercise or ESPP purchase a disqualifying disposition? What is the tax treatment for early sale?

If I gift or donate stock from an incentive stock option exercise/hold that triggered AMT, do I get an adjustment for it on my AMT return? What happens to my AMT credit?

How does the wash sale rule apply if I sell ISO stock to avoid AMT and then quickly repurchase the stock at current market prices?

My company allows me to exercise my ISOs early and receive stock subject to a company repurchase right during the vesting schedule. Does my early exercise before vesting affect the calculations for AMT or disqualifying dispositions?

If I plan to sell my ISO stock before the end of the required holding periods (i.e. a disqualifying disposition), is there any tax advantage to receiving ISOs instead of NQSOs?

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Employee Stock Purchase Plans (ESPPs)

ESPP Choices: Flip Or Hold? (Parts 1 and 2)

NEW! If I donate stock that has met the holding periods for Section 423 ESPPs, what is the tax treatment?

If I gift stock that has met the holding periods for Section 423 ESPPs, what is the tax treatment?

Is the gifting or donation of stock that I acquired from an ISO exercise or ESPP purchase a disqualifying disposition? What is the tax treatment for early sale?

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Stock Appreciation Rights (SARs)

If I exercise stock appreciation rights (SARs), will I need to make estimated tax payments?

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Financial Planning

NEW! New Tax Act And Medicare Surtax: Impact On Stock Option And Restricted Stock Strategies

NEW! Foreign Executives Transferring To The United States: Tax-Planning Strategies For Equity Compensation

NEW! Compliance Concerns That Executives Must Understand To Prevent SEC, IRS, And Corporate Problems (Part 2)

Stock Option Financial Planning After Your Tax Return Is Filed And At Year-End (Part 1)

Stock Option Financial Planning After Your Tax Return Is Filed (Part 2)

Strategic Planning With Roth IRAs And Stock Compensation (Part 1)

Strategic Planning With Roth IRAs And Stock Compensation (Part 2): A Case Study

Better Late Than Never: Stock Option Strategy For The Market Upturn

How Dividends Impact Your Strategy For Stock Options And Restricted Stock (Parts 1 and 2)

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

Sophisticated Techniques To Defer Or Reduce Taxes On The Sale Of Your Company's Shares (Part 2): SSBICs

Gifts: Save On Estate Taxes With Transferable Stock Options

NEW! I am thinking about selling some company stock this year, as next year my income will trigger the 3.8% Medicare surtax on investment income, along with higher tax rates on capital gains and dividends. After selling the stock this year, I would then repurchase it to reset the basis. What are the issues I need to consider?

NEW! Do companies make stock option or restricted stock grants to directors? Any survey data on director grants?

NEW! If I donate stock that has met the holding periods for Section 423 ESPPs, what is the tax treatment?

What is the tax deduction for donations of my company stock?

What is the tax treatment for gifts of company stock?

How does a dividend affect the value of stock options, restricted stock, and restricted stock units?

I plan to exercise options for stock that pays dividends. Are there any exercise strategies or at least mistakes to avoid?

When does my holding period for the special tax rate on dividends begin? At exercise or vesting?

If my brokerage firm lends my dividend-paying company shares while I have a margin loan, will the dividends get the favorable tax rate for qualified dividends?

How do I calculate whether my after-tax gains will be greater by investing my current option spread into a mutual fund or a diversified stock portfolio, as opposed to just waiting to exercise the options at the end of the term?

As a director, can I elect to take part of my retainer as "deferred stock units"?

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Job Events

NEW! Job Loss Quiz

NEW! Job Loss And Your Stock Grants (Part 1): Options, Restricted Stock, And ESPPs

NEW! Job Loss And Your Stock Grants (Part 2): Changes Of Employment Status, Post-Termination Tax, Severance

I am leaving my job. Is my company required to tell me how many vested options I have, how long I can exercise them after I leave, or when they expire?

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?

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Life Events

NEW! Life Events Quiz

Funding Your Child's College Education With Stock Options And Other Stock Grants (Parts 1, 2, and 3)

Strategic Planning With Roth IRAs And Stock Compensation (Part 1)

Stockbrokers' Secrets (Part 6): What I Tell My Best Clients About Retirement Planning With Stock Compensation

Retirement Planning With Your Stock Options And Other Stock Compensation (Part 1: Pre-Retirement Planning)

How do stock grants affect Roth IRA contributions and conversions?

How is restricted stock handled in divorce? Who pays taxes when restricted stock or vested company shares are transferred in a divorce settlement?

Do I pay any taxes when stock options are transferred to my former spouse as a part of my divorce settlement?

After stock options are transferred to my former spouse in divorce, who pays the taxes at exercise? How does my company withhold and report the taxes?

Can an ISO be divided in a divorce?

Instead of transferring stock options to my ex-spouse in the divorce property settlement, can I assign the economic benefits of her/his portion with the right to designate exercise?

How would my stock options be taxed and valued for estate tax purposes upon my death?

Do tax withholding and reporting apply to NQSOs exercised by the estate or beneficiary?

At death, do tax withholding and reporting apply to restricted stock if the vesting is accelerated or allowed to continue?

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SEC Law & Rule 10b5-1 Trading Plans

NEW! Compliance Concerns That Executives Must Understand To Prevent SEC, IRS, And Corporate Problems (Part 1): Company Stock Trades

With insider trading, do I need to be caught in the act to be investigated or prosecuted?

Can the SEC, the Treasury, or my company take away stock option gains, restricted stock, and performance shares after accounting fraud has occurred?

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?

How widely used are Rule 10b5-1 trading plans? Is information about their use available?

What is an affiliate, and why does affiliate status affect the ability to resell company stock?

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M&A

What could happen to my restricted stock in an acquisition of my 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?

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Pre-IPO

NEW! Pre-IPO Company Employees: Their Stock Option Tax Dilemma

How do private companies create liquidity for employees' options and stock, other than going public or getting acquired?

How do I value options and stock in a privately held company?

Any survey data on stock grants in privately held companies?

In a privately held company, can restricted stock and stock option grants be structured so that they vest only when the company goes public or gets acquired? How is this taxed?

If I exercise my vested options during a lockup period, does the date for calculating the spread occur at exercise or at the end of the lockup, when I can sell the stock?

Are there ways around a lockup?

Why do some companies grant stock options that are immediately exercisable before they vest and are subject to a repurchase right by the company?

When should I prefer to immediately exercise an option into stock that is still subject to vesting and/or a company repurchase right? What is the risk?

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GLOBAL TAX GUIDE This is premium content

UPDATED OR EXPANDED

Australia
Canada
Denmark
France
Japan
Netherlands
Singapore
Spain
United Kingdom
United States

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GLOSSARY

NEW!

Antidilution Provision
Form 1040A
Form 1040EZ
Form 1099-S
Founder's Restricted Stock
Key Employee
Market-Standoff Provision
Net Investment Income Tax (NIIT)
Resetting The Basis
Substitute Statement

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ASK THE EXPERTS

NEW!

I have received Form 1099-B from my broker, and I don't think it shows the correct cost basis on the company stock I sold last year. For the shares I acquired from stock options and my employee stock purchase plan, it does not seem to include the W-2 income for the exercise or for the ESPP purchase. While I'm far from a tax expert, I have learned from this site that the W-2 income should be part of the tax basis. Meanwhile, for my restricted stock units, the 1099-B does not give any basis for the shares I sold. I don't want to incorrectly report the sale on the Form 8949 and overpay taxes. What should I do?

My company used to grant stock options. Then it started making smaller grants of restricted stock units instead. Currently it has returned to granting stock options now that our stock price is lower than those of our competitors. Why these shifts?

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NONQUALIFIED DEFERRED COMPENSATION

The latest major additions at our new website myNQDC.com:

NEW! What are the potential tax increases in 2013 that may directly affect my nonqualified deferred compensation?

NEW! How does the health-care reform law affect planning for nonqualified deferred compensation and my Medicare tax rate?

NEW! Is there a distribution-election strategy when I'm uncertain in the intermediate term about my own cash flow and the company's finances?

NEW! Section 162 Bonus Plans: An Alternative Or Companion To NQDC Plans

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