| Author |
Message |
kbrisson
Joined: 23 Mar 2005
Posts: 5
Location: USA
|
 Posted:
Mon Jun 05, 2006 11:34 pm Post subject:
Question on Incentive Stock Options |
|
|
I have been carrying a number of exercisable incentive stock options and I have begun to exercise those recently as I am seeking new employement (options are lost once employment is terminated). My question is, how are these gains taxed and at what rate ? I have exercised options in the past two years, one in which I had a CPA prepare my returns and this past year I did my tax returns. It was unclear to me how this impacted the tax I paid as Schedule D only appeared to show a slight loss for the commission paid on the transaction. I bought and sold within a few days period.
|
|
| Back to top |
|
 |
kristinecfp
Joined: 12 Jan 2006
Posts: 9
Location: Lee's Summit, MO
|
| Posted:
Tue Jul 18, 2006 12:52 am Post subject:
|
|
|
Depends on what kind of stock options they are.
If they are qualified, you don't recognize any income until the actual stock is sold - then you pay tax on the difference between the amount realized from the sale and the amount you paid for the stock.
If the options are non-qualified, you must recognize income when the options are excercised (the FMV of the stock less the amount paid is treated as compensation and is included on your W-2) and then again when sold (the difference between the amount realized when sold and the FMV when exercised is reported on Schedule D).
Stock options can also trigger the Alternative Minimum Tax (AMT), so you should consult a tax professional before you exercise any options as well as to help you prepare the tax return.
Kristine
_________________
Five Financial Mistakes Solo Professionals Make ~ Free Teleseminar
http://tinyurl.com/kcza9 |
|
| Back to top |
|
|
kbrisson
Joined: 23 Mar 2005
Posts: 5
Location: USA
|
| Posted:
Tue Jul 18, 2006 2:32 am Post subject:
|
|
|
Not sure what you mean by qualified and non-qualified. These are incentive stock options. I've exercised option grants before over the past few years, and one year had a CPA do my taxes. Schedule D showed a slight loss (for the broker commission to exercise).
|
|
| Back to top |
|
|
|
|
|
|
FAQ
Memberlist
Register
Profile
Log in to check your private messages
Log in
