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Subject:  Re: retire early study Date:  2/10/2000  11:35 PM
Author:  foolishtomtom Number:  3634 of 876343

if you exercise stock options while a resident of CA, you will be taxed by CA. The exercise of stock options is a recognition event treating the excess of the fair market value of the underlying stock over the amount paid for the stock (the "spread") as compensation income. Because the "spread" is compensation income, it is likely that CA will nail you even if you exercise after moving, since the compensation income will be "sourced" in CA, where you will formerly employed. If your options are incentive stock options, the results are different.

Thank you for reply! Regarding non-qualified options, I agree CA might try to "nail me", but under what law? I guess this is the kind of info you pay tax pros for. HOWEVER... I should have specified earlier, most of the stock I'm concerned about is already-excercised ISO options, for which I've already paid CA AMT. But the AMT basis is still much lower than the current market value and I'm looking to minimize taxes when I do ultimately sell. The CA tax savings would not be insignificant.

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