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Hi All,

I have non-qualified employee stock options, vested and worth about 500K at today's prices.

I live in CA, so I am looking at an effective tax rate near 39.6% federal, 9.3% state, plus the 1.45% for medicare. My wife's and my salary combines to 120K+ (and my salary is large enough so that my FICA will max out before year end).

So, I'm facing a nasty, huge tax bite if I exercise. I would love to spread the exercise out piecemeal during retirement, but being employment-based NQSO's, I am forced to exercise the options if I terminate, even though the options themselves endure for 10 years since the grant date.

The only idea I have for reducing the tax hit is to exercise half on Dec 31, and the other half on Jan 1, but even then most of the 250K will be taxed at the highest rate.

Any other ideas on how to reduce OI tax? [I also thought about waiting for the fairtax to be passed before exercising, but the options will expire by then, don't ya think:-]
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