If your employer has granted you incentive stock options (ISOs), you’ve likely spent time researching the tax treatment. If so, you’ve probably read about the alternative minimum tax (AMT), and qualifying and disqualifying dispositions. Perhaps the complication has left you wondering: What does this mean to me as a taxpayer?
If you’re wondering how to maximize the value of your incentive stock options (ISOs), non-qualified stock options (NQSOs), restricted stock units (RSUs), or other forms of equity compensation, you’re not alone. After all, there is plenty to think about if you’ve been granted equity compensation. You may dream of how to strike it rich. You may fear you’ll do something wrong and miss out. You might become mired in taxing technicalities, including AMT calculations. All that thinking can backfire if “TMI” (too much information) prevents you from proceeding.
When you exercise your employee stock options, you may want to consider one of the following options to implement the exercise: A cash exercise, or a cashless exercise. This is not an exhaustive list of options. You may run across other terms such as sell-to-cover, same-day sale, or share withholding. While some of these terms are interchangeable and result in a similar outcome, you should check your plan details prior to implementing any specific exercise strategy.
Whether you’re just getting started or expanding your knowledge, here are some resources to get you started.
Understand what you have, what you should consider, and what ultimately matters to you.
I write about equity compensation and employee stock options in a way that is easy to understand.
Understand what you have, what you should consider, and what ultimately matters to you.
Get the Ultimate Guide to Incentive Stock Options to better understand your equity compensation.
