Key factors in year-end planning for equity comp and company stock in 2015
Donate company stock like Mark Zuckerberg
Special articles on year-end financial and tax planning
IRS updates audit guide for equity compensation
Continuing education credits at and
Year-end deferral decisions with nonqualified deferred comp


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Year-end planning for stock compensation and company stock holdings can be tricky amid the ongoing impact of the tax-rate changes that have taken effect in recent years. The articles and FAQs in our section Year-End Planning present ideas and strategies that can help you make smarter decisions and better understand the key issues. In the newsletter below, we present two FAQs adapted from our content, a list of our exclusive year-end articles, and various other items of interest to the users of

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Two FAQs On Year-End Planning In 2015

What do I need to know about year-end planning for equity compensation and holdings of company stock in 2015?

When the holiday decorations spring up, so does the need for year-end financial and tax planning. Fortunately, the year-end factors in 2015 have turned out to be more nice than naughty. Indeed, we predict that year-end financial and tax planning will be more peaceful and certain in 2015 than it may be during the next few years. The likelihood of tax changes in 2016, a presidential election year, is very low, so the prospect of tax-rate shifts is not a big factor in decisionmaking at year-end 2015.

Enjoy the calm while it lasts. Before year-end 2016, a new president will have been elected on a platform probably including major tax reforms. Anticipated tax changes (and uncertainty around them) may then significantly affect decisionmaking.

For now, however, all is quiet on the tax front. This is the third year-end since the enactment of the American Taxpayer Relief Act (ATRA) and the Affordable Care Act. As with year-end planning the past few years, the tax changes that they introduced affect year-end planning in 2015, particularly for individuals with annual income of $200,000 or more. While joint filers making over $464,850 per year in taxable income are hit hardest, they are not the only people affected by the changes in tax law. As a result, tax planning remains important. Multi-year planning is especially valuable with equity compensation, as you can control the timing of stock sales and option exercises, and you know when restricted stock/RSUs will vest.

In the year-end section at, a two-part article presents some ideas for tax and financial planning (summarized below) to review before the end of the year.

  1. Understand your tax rates and trigger points.
  2. Consider the time value of tax money on an NQSO exercise.
  3. Remember the additional Medicare tax.
  4. Calculate the alternative minimum tax (AMT) when deciding when to exercise ISOs and NQSOs.
  5. Examine standing orders when selling stock to get the right cost basis that minimizes taxes.
  6. Avoid the impact of the AMT by selling ISO stock.
  7. Use an early-in-the-year exercise of ISOs to pay the alternative minimum tax later (one of many ways to manage the AMT).
  8. Make charitable donations by using appreciated stock.
  9. Make gifts of stock.
  10. Take advantage of the lower capital gains rate, and harvest losses.
  11. Evaluate state and local taxes.
  12. Preserve gain by "selling short against the box."
  13. Consider exercising options for depressed shares.

See also two related FAQs at for ideas on exercising stock options and on selling company stock at the end of 2015. In addition, other articles discuss year-end planning specifically for restricted stock and RSUs and employee stock purchase plans.

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How do I donate company stock at year-end?

As recently reported by The New York Times and many other media sources, Facebook founder Mark Zuckerberg and his wife, Priscilla Chan, have declared their intention to donate 99% of their Facebook stock wealth to charitable causes during the course of their lives. The New York Times adds that their move is the most prominent manifestation yet of "a growing interest in philanthropy among Silicon Valley's young billionaires."

While very few of us become billionaires, for many people charitable giving at any level is a very worthwhile use of accumulated wealth, such as holdings of company stock. In fact, nonprofits appreciate gifts of shares as much as gifts of cash. At we have an entire section on the topic of gifts and donations involving stock acquired from equity compensation. The commentary below summarizes some of that section's guidance on how to make stock donations at year-end. For details, see our articles and FAQs on the topic.


For year-end donations, be sure the stock transfer is completed by December 31 to make it count for the current tax year. For electronic transfers from your brokerage account, the donation is recorded on the day it is received by the charity/foundation (not when you approve the transfer). With increased year-end activity at brokerage firms, you should plan your year-end stock gifts as early as possible and have ongoing communications with your broker to ensure that the transfer takes place.

Tax Rules

For a charitable donation of company stock acquired from equity compensation, the tax treatment is the same as it is for donations of any stock to a qualified charity. (The tax treatment of gifting stock to donor-advised funds is similar to that of donating stock to qualified public charities.)

After you have held the company stock for more than one year, at the time of the donation you get a tax deduction equal to the fair market value of the stock (not to your cost basis). For stock acquired from an option exercise or an ESPP purchase, the holding period begins on the day after exercise/purchase, while for restricted stock/RSUs it starts on the day after vesting. If the sale of the appreciated shares would have triggered long-term capital gains, your deduction is up to 30% of your adjusted gross income (20% for family foundations), and you can carry forward higher amounts for five years.


With a charitable gift of appreciated shares held long-term, the donation you make and the deduction you get are greater than they would be if you were to instead sell the shares and donate the cash proceeds. This is because when you donate shares, you avoid paying the capital gains tax.

Donation Example

Suppose you can either (1) donate $100,000 in company stock or (2) sell the stock first and donate the proceeds.

Stock: You donate $100,000 in company stock that you have held for at least one year (10,000 shares trading at $10 per share that you received at $1 per share) to a favorite charity. Your $100,000 tax deduction results in tax savings of $40,000 (assuming a 40% combined federal and state tax rate on your income).

Cash: You sell 10,000 shares, worth $100,000, and donate the cash. On your $90,000 gain ($100,000 minus the cost basis of $10,000) you pay $18,450 in taxes (15% federal capital gains tax plus the 5.5% state tax), resulting in $81,550. This amount will be lower if you trigger the 20% tax rate on capital gains and the 3.8% Medicare surtax. You get a tax deduction for the net amount of cash that you have donated. Your tax savings are $32,620 (40% of $81,550), $7,380 less than the tax savings with a donation of stock.

  Donation of stock Donation of cash
Combined federal and state income taxes 40% 40%
Tax rate and amount for selling stock (Not applicable) 20.5% / $18,450 (0.15 x $90,000)
Net amount to donate $100,000 $81,500
Tax savings $40,000 $32,620

Special Issues

If the donated shares were acquired from incentive stock options or an employee stock purchase plan, additional tax consequences occur if you donate the shares before you have met the required holding periods. (See also our FAQs on donating shares from a Section 423 ESPP after meeting the holding period, and gifting/donating ISO shares after triggering AMT.) Executives and directors will also want to review the Section 16 and Rule 144 requirements before gifting or donating company stock.

Much More Where This Came From

For other ideas on year-end planning, see the year-end articles and FAQs at Our section about estate planning also has content related to the theme of gifts and donations.

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Special Articles On Year-End Planning

Top Ideas For Year-End Tax Planning With Stock Compensation (Parts 1 and 2)
Consider year-end or year-beginning tax planning with your stock compensation and company stock holdings. While investment objectives, not tax considerations, should generally drive your decisions, here are several ideas to review to prevent paying more taxes than necessary. Part 1 is available free to all registered users.

Stockbrokers' Secrets: Year-End Planning For NQSOs, Restricted Stock, And RSUs, by John Barringer and Michael Beriss
The time for tax planning is before the year ends; tax season is too late. Learn about several ideas for year-end 2015 that apply to nonqualified stock options (NQSOs) and restricted stock/RSUs.

In Their Own Words: Financial Advisors On Strategies For Stock Compensation And Company Stock Holdings At Year-End 2015
Year-end planning can be tricky. We asked several financial advisors for their ideas on financial and tax planning for the end of 2015 and the start of 2016. This article presents their responses in their own words. Available free to all registered users.

Year-End Strategies For Restricted Stock: Ideas To Consider, by Bruce Brumberg
As part of your year-end and year-beginning tax planning, don't forget to review any grants of restricted stock, RSUs, or performance shares that vested this year, plus other company stock holdings. This article presents strategies many experts suggest.

Year-End Strategies For Employee Stock Purchase Plans: Ideas To Consider, by the myStockOptions Editorial Team
When you think about year-end financial and tax planning, don't forget to review shares acquired through an employee stock purchase plan. This article outlines issues and strategies to contemplate.

Stockbrokers' Secrets: Year-End Planning For ISOs, by John Barringer and Michael Beriss
Learn about year-end planning specifically for incentive stock options, including ideas related to the alternative minimum tax.

The ISO Tax Trap And The AMT Credit Myth: What To Do Before Exercise And At Year-End, by Alan Ungar
The tax reductions of the past few years have brought both good and bad news for holders of incentive stock options (ISOs). While you may have lower capital gains rates when you hold the shares long enough after exercise, it's harder to avoid the risks of the alternative minimum tax (AMT) and to fully recoup any AMT credit.

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IRS Updates Audit Guide For Equity Compensation

To help its examiners, the IRS develops Audit Techniques Guides (ATGs) to provide insights into the issues and accounting methods that are unique to certain industries and types of compensation. While ATGs are designed to provide guidance for IRS employees, they can also reveal tax issues that need special attention from taxpayers, companies, and tax professionals.

In August, the IRS released an updated version of its ATG for audits involving stock compensation: Equity (Stock) – Based Compensation Audit Techniques Guide, which seems to be a set of marching orders for IRS examiners. Companies, tax professionals, and compensation consultants will want to review it. Parts of the guide summarize and confirm the tax treatment for different types of equity compensation. Other parts raise issues about how the IRS applies and interprets certain IRC sections and IRS regulations. A commentary on the updated ATG is available at the blog.

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Need CE Credits Before Year-End? Learning Centers At And Offer Credits For CEPs, CFPs, And Other Professionals

As the clock ticks toward the close of 2015, many professionals with continuing education requirements to meet before year-end will be relieved to learn that and its sibling website have courses and exams offering continuing-education credits. At, the Learning Center offers up to 25 credits for for Certified Equity Professionals (CEPs) and up to 15 credits for Certified Financial Planners (CFPs). Each course of study features podcasts, articles, and FAQs from They are woven into a dynamic, interactive learning tool that teaches the topics in a memorable way. The answer key for each exam also links to relevant content on the site for further reading and learning.

Built on a similar model, the the Learning Center on nonqualified deferred compensation offers up to 6 continuing education credits for Certified Financial Planners, 6 Professional Achievement in Continuing Education (PACE) credit hours for CLU® and ChFC® certifications, and up to 12 CPE hours for credentialed ASPPA members.

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Nonqualified Deferred Compensation:, A Complete Online Resource For Participants And Professionals

Tax-rate increases and the new Medicare surtax have boosted the popularity of nonqualified deferred compensation. From the award-winning publishers of, features articles, FAQs, a glossary, podcasts, interactive quizzes, and a calculator, all to help you, your clients, or your executives understand and make the most of nonqualified deferred compensation.

  • Clear explanations of NQDC by experts
  • Financial planning, taxation, risks, job loss, and legal issues, along with core concepts
  • Appeals to plan participants, plan providers and administrators, financial advisors, attorneys, and companies with NQDC plans

For companies, education and communication are vital for ensuring NQDC plans work properly to motivate and retain vital executives, directors, and key employees. Companies can license our educational content and tools for websites, print materials, newsletters, and presentations.

For more information on, including its prestigious advisory board, see the About Us section of the website, and please contact us by phone (617-734-1979) or email (

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Year-End Deferral Decisions With Nonqualified Deferred Compensation

Many executives and highly compensated employees both receive stock grants and participate in the company's nonqualified deferred compensation (NQDC) plan, where they can defer cash salary and bonuses to defer taxes (this is separate from an RSU plan with a feature permitting the deferral of share delivery).

Under the tax rules, the election to defer salary must be made in the year before the income will be received. Consequently, many NQDC participants are now making decisions about salary deferrals for 2015. In fact, the fourth quarter of the year is the most common period during which salary deferrals are elected through NQDC plans for the year ahead. As with the year-end decisions for stock grants discussed above, one of the big issues to consider when planning next year's NQDC deferrals at enrollment are the ongoing impact of the 2013 tax-rate increases.

For the key issues to consider in year-end deferral decisions with nonqualified plans, see an FAQ at, a separate sibling website of To make projections for current and future tax rates, and to compare returns both through deferrals and through not deferring income, try the calculator at Another FAQ at explains the many benefits that deferral through NQDC plans can offer.

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