Category: H

This term is used for several purposes. First, it describes the time you must hold your stock options before they vest. For this, the holding period typically begins on your grant date, and ends when specified in the terms of the grant (or potentially, when the company is acquired by another firm). It’s also used to describe how long you must hold a stock before its capital gains are treated as short- or long-term, as well as how much time must pass before an incentive stock option sale becomes qualified.

If your company’s stock price increases significantly from the price at which you acquired it, it’s considered a low-basis stock, because your basis is much lower than its current value. When the stock price does not increase much from the price at which you acquired it, it’s considered a high-basis stock, because your basis is nearly as much as its current value. From taxable accounts, it’s usually better to use low-basis holdings when donating in-kind shares to charity, because you’ll eliminate more otherwise-taxable capital gains.