Tax Consequences of Stock Options: ISOs, NSOs, ESPPs and RSUs

Exercise, Sale, Section 83(i) and AMT Considerations

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A


Conducted on Thursday, June 27, 2019

Recorded event now available

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Program Materials

This webinar will discuss the tax implications of incentive stock options (ISOs), non-qualified stock options, ESPPs, and restricted stock units (RSUs). Compensating employees with stock allows them to purchase company stock at reduced prices and to share in the success and appreciation of the company. Since the type of incentive offered determines when, how and whether stock is taxed, either along the way or at sale, it is crucial that a tax practitioner understand the differences between these types of plans. The panel will explain how and when each type is taxed, the best tax strategies for each award type, and the new 83(i) election.

Description

ISOs trigger no tax until sold. However, the non-statutory or non-qualified stock options are more frequently seen. RSUs aren't options at all; these are a promise to deliver stock at a future date.

The terminology that surrounds these plans is unique. Necessary chronological terms include grant date, vesting date, exercise date, and sales date. Depending on the type of plan, the transfer may be taxed at any of these dates and may be subject to tax at ordinary, capital gains, AMT rates, or a combination of the three.

One of the biggest hurdles and the key to accurately reporting these transactions is piecing together the necessary documentation. The taxpayer may have received, and hopefully retained, an explanation from the company, Forms 3921 or 3922, details of a cashless sale, and(or) Form W-2. This needed documentation often spans years, from grant date to the date of sale.

Listen as our panel of experts explains the types of stock plans being offered, how and when each is taxed, minimizing the tax on these incentives, and the benefits of the new 83(i) election.

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Outline

  1. Incentive stock options
  2. Non-qualified stock options
  3. ESPPs, qualified and non
  4. RSUs
  5. Other stock plans
  6. Section 83(i) election

Benefits

The panel will review these and other important issues:

  • Recognizing ISOs, NSOs, ESPPs and RSUs
  • Discerning taxation timing and rate differences between the most common stock plans
  • What documentation is needed to properly report stock transactions
  • Explain how and when taxpayers can garner benefits of the new 83(i) election

Faculty

Lampron, Shawn
Shawn E. Lampron

Partner
Fenwick & West

Ms. Lampron focuses her practice on executive compensation and employee benefits for emerging growth businesses, public...  |  Read More

Zobayan, Marlene
Marlene Zobayan

Partner
Rutlen Associates

Ms. Zobayan has over twenty years of international tax and benefits experience, including global equity plans,...  |  Read More

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