Lucky us! My husband will be receiving a sizeable bonus this year. I'm interested in all tips for reducing and/or deferring the amount of taxable income he will receive from the bonus.He is an officer of the company and has already maxed out on their retirement savings plan. His employer is willing to creatively structure the compensation. Thanks,MG
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.
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |