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Stock Options
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Do You Need Help with Stock Options?

We analyze your stock options including transferability, vesting schedule, holding period, price averages, risk
reduction, expiration, taxes, gifting, diversification, etc. Stock options that we cover:

Incentive Stock Option (ISO): There is a preferred tax treatment for ISO. You don't recognized income when
option is granted. You don't have tax due when option is exercised but you may have early recognition of AMT of the difference between the option price and the FMV at the date of exercise. ISO can only be transferred upon
death. You have 10 years (or less) to exercise the option. After your employment is terminated, you may have
30 to 90 days to exercise vested options; this period may extend to six months to one year in the event of death
or disability.

Non-qualified Stock Options (NSO): There is no preferred tax treatment for NSO. You are taxed when an option
is exercised or sold. You are taxed at ordinary income rate and the amount is included in your W-2. You can
transfer NSO to family members.

Section 83(b): You make an election to include in income the FMV of the stock, less any amount paid for the
stock at the time the stock is issued. You can only make the election if the stock is subject to substantial risk
of forfeiture and is not transferrable. Any subsequent appreciation or depreciation is taxed as capital gain or

Employee Stock Purchase Plan (ESPP): You can purchase company stock at a discount from the market price.
Purchase price can be as low as 85 percent of the FMV on the offer/grant date or sale date. The holding period
and sold price determines the tax consequences (ordinary income or capital gain.)

Restricted Stock: The shares of stock are granted to you at no cost or at a bargain price with restrictions. In
general, you can not dispose the stock before a specified period of time, and cannot work for a competitor and/or must work for a specified time period and meet performance criteria. You recognize ordinary income when the stock is substantially vested. The appreciation is taxed as capital gain when you sell the stock if you file an 83(b) election within 30 days of the date of the grant.



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