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Check out this web site for information on equity compensation rules as it pertains to taxation. I have purchased 2 of the books and found them easy to read and very up-to-date.

We gifted some of our ISO's a few years back...big mistake. We got nailed with even more AMT tax and were not able to take the credit later as they were no longer our shares. Best sure that you aren't in an AMT situation BEFORE you do the gift.

Here's a couple other points:
1. Are you gifting more that $10,000?
2. She obviously will be in a looooooow tax bracket so I wouldn't worry about not using a qualified plan unless it would hurt her financial aid.
3. Have you thought of letting it continue to appreciate as your's and then giving it to her in $10,000 chunks after she graduates (and before her loans come due) - you could deliver it earlier if it doesn't screw up her aid package. I have my kids college fund in a separate, but standard account and plan to start gifting $10,000 to each child once they start college. If they have to get some loans that's ok with me - I think, based on my own experience, that it's good to know how loans impact your life after college. And, I can always help them pay the loans off if that's what we, together, decide to do.

Just food for thought...


PS. I was maid of honor at my best friends wedding 3 years after college. Her Dad announced that he would pay off the balance of her loans so she could have a fresh start with her new life...let me just say that JOY just wasn't an adequate word to describe the feeling she had that day!
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