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Author: akeetin Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121586  
Subject: Company stock options/ capital gain Date: 7/9/1999 4:40 PM
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I'm going to receive company stock options in my new job with the lower of the price on my start date and 1 year later (minus 15%). Lets assume that on year later I'm going to buy the stocks. If I'm going to sell the stock within 1 year of my purchase date, do I need to pay short term capital gain tax? Or does my start date of employment count as the counter for the short/long term capital gain? Or do I need to income tax on the entire amount?
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Author: johnbredehoeft Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17151 of 121586
Subject: Re: Company stock options/ capital gain Date: 7/10/1999 12:29 PM
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The IRS rule is that you must hold the stock for the length of the Grant Period and at least 1 year from the date of purchase. Since you will be buying at the end of the grant period, you must hold the stock for at least 1 year (go 1 year and 1 day) to realize the LT-Capital Gains tax rate.

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Author: mathetes Big red star, 1000 posts Old School Fool Motley Fool One Everlasting Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17177 of 121586
Subject: Re: Company stock options/ capital gain Date: 7/12/1999 8:17 AM
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I'm going to receive company stock options in my new job with the lower of the price on my start date and 1 year later (minus 15%). Lets assume that on year later I'm going to buy the stocks. If I'm going to sell the stock within 1 year of my purchase date, do I need to pay short term capital gain tax? Or does my start date of employment count as the counter for the short/long term capital gain? Or do I need to income tax on the entire amount?

In addition to the answer you already got, which correctly advised you that you must hold the stock for one year + one day after buying it, you would do well to refer to www.fairmark.com for additional information. The way you word your question suggests that you are very new to this whole area; the tax attorney who created the Fairmark site has done a wonderful job of explaining stock options in clear English. There's a lot more you should understand before exercising.

mathetes

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