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

Note: CLE credit is not offered on this program

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


Conducted on Monday, July 27, 2020

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. The type of incentive determines when, how, and whether a stock is taxed, either along the way or at the sale of the stock. So, a tax practitioner must 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, non-statutory or non-qualified stock options are more common. 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 dates of the grant, vesting, exercise, and sale. Depending on the type of plan, the transfer may be taxed at any of these dates and may be subject to tax at ordinary income, 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 the grant date to the date of sale.

Listen as our panel of experts explains the types of stock plans available, how and when each is taxed, and minimizing the tax on these incentives.

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Outline

  1. Incentive stock options
  2. Non-qualified stock options
  3. ESPPs, qualified and not
  4. RSUs
  5. Other stock plans
  6. Section 83(i) election
  7. Repricing
  8. Other considerations in light of the current economy

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 repricing stock options

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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