Category: N

Among various stock options available, NQSOs are relatively easy to understand, with more latitude to control the taxable impact, as compared to restricted stock units, by choosing when to exercise your options. That said, because proceeds are taxed as ordinary income at exercise, NQSOs may be less tax-efficient than ISOs. Describing availability, vesting schedules, tax treatments, maximum grants, 83(b) eligibility, termination agreements, and detailed cash flow considerations is beyond the scope of this glossary.

A tax strategy that allows you to transfer shares of company stock inside a 401(k) plan in-kind into a brokerage account. The cost basis of the stock is included as ordinary income in the distribution year, and any capital gain is subject to long-term capital gains rates.

An additional tax of 3.8% levied on realized capital gains for high-income earners.

An option exercise in which a certain number of shares are withheld to cover the cost of taxes and/or the purchase price. The result is owning less shares post-exercise than the total amount of options exercised.

See gross/net value.