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Financial Planning / Tax Strategies


Subject:  Re: Tips to reduce taxable income Date:  9/29/2000  9:57 AM
Author:  BostonCPA Number:  40422 of 132686

One possibility would be to have your husband's employer give him company stock in lieu of a cash bonus. The company could then place a restriction on the stock saying that it could not be sold for a specified period of time (i.e. one year, five years, etc.). By doing so, your husband would not recognize income on the stock until the restriction lapses. At that time he would recognize income based on the fair market value of the shares.

If this is the route your husband and his company go, he may want to consider making what is called a Section 83(b) election. It is a little complicated, but it basically defers recognition of the appreciation of the stock when the restriction lapses. He would recognize income in the year the stock is received (this year), but if he expects the stock to appreciate substantially, it's not a bad idea. You should consult your tax advisor if you decide to do this.
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