Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (10) | Ignore Thread Prev | Next
Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 120794  
Subject: Re: Taxes on Company Options Date: 11/15/2013 5:04 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 3
Well, capital gains ARE part of income. So it's not an either/or situation.

If you exercise the options and hold the stock for at least a year (or until 2 years from the option grant if that is longer), you can get capital gain treatment. Otherwise, it's all ordinary income and will be included on your W-2.

The tricky part about reporting is that you'll also need to report the sale of the stock on your return, but that will have virtually no gain or loss (typically it's a small loss in the amount of some transaction fees, but sometimes there will also be a change in the price of the stock between the exercise of the option and the sale of the stock.)

If you don't report correctly, you'll get a nasty letter from the IRS a year or two after you file asking for a very large sum of money. You'll then spend weeks in bureaucratic purgatory fixing things up, all the while receiving more threatening letters.

--Peter
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (10) | Ignore Thread Prev | Next

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
2013 Feste Award Voting Begins!
Who will win the 2013 Feste Award? Vote now for the Fool that most exemplifies the Fool Community mission of Learning Together!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Berkshire Hathaway

Reestablishing the Middle Class
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement