steelheader asked: I recieved a little over $3000. Both my company nor the broker will withhold taxes for this money. So how do I pay the taxes? I'm affraid that if I leave it until filing income tax time in April, I might owe too much and therefore pay a penalty to Uncle Sam.

Taxservice already responded: ***The money was included in your pay, and income tax was withheld. Your gain is taxed at ordinary rates, based on the difference between the exercise price and the selling price. They may be the same or even show a small loss because of the cost of selling.

There should be no great tax consequence over such a small amount of money.

Taxservice is certainly correct in terms of what should have happened. But unless he received some inside knowledge there from a hidden source -- or corresponded with you, steelheader, privately before posting his public reply -- you should check with your payroll department to verify that they did withhold income taxes. They are supposed to under the circumstances you describe.

If they didn't, you can also file an Estimated Tax with the IRS and, if applicable, with your state income tax authorities. As taxservice noted, the tax on the $3,000 won't be too great an amount, but it certainly will be in the 100's of dollars.......

mathetes