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22 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Who gets NSO? |
Employees directors consultants. |
Non qual much more common |
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Who gets ISO's |
Employees ONLY! |
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Are options transferable?! |
NSO yes. ISO only at death |
ISO is for the minions so is it as good?!?? |
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If it's non qual how is it taxed?! |
Ordinary naturally |
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How are ISO taxes? |
Potential for LTCG |
Probably a little of all |
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ISO is for everyone is there a limit?! |
100k rule |
Shocked at the small limit |
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What is the Bargain Element?! |
FMV - excercise |
It's what's in play?!? So it's not the floor |
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What is a qualifying disposition? |
2 years grant, 1 year excercise = cap gain treatment sale of stock. |
It only pertains to ISO |
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Why would you do a disqualifying distribution. It's only 2 years from grant and one year from excercise!! |
If you think that stock is tanking!!!! |
Why would I sell and violate Voya trading recquirements? |
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If I give more than 100k option via grants. What happens?! |
Portion above 100k on that year becomes disqualified. |
Is it the end of the world? |
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Taxation of NSO ....grant/excercise/sell |
1. Grant: At time of grant no taxes realized 2. Excercise: realize ordinary income for bargain element!! Remember 2 year after grant rule then 1 year after excercise 3. One year after excercise realize LTCG above bargain elemebt
Conclusion. Nothing on grant/floor. Paid your ORD bc its non qual on bargain and then wait to excercise. If one year get long term treatment!!! Your excercise price is grant plus bargain element.
FMV at excercise minus sale price is gain. |
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ISO grant/ex/sell |
Grant = No tax Excercise=AMT preference income Sell: if 2/1 then grant/excercise - sale price. Turns bargain element to LTCG |
Remember watch dates. 2/1 year |
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In an ISO is the bargain element taxed?!? |
No tax unlike NSO!!!!! But may trigger amt preference income |
Not so quick |
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NUA comes from where? |
Pension plans 401k. ESOP. Can be from rollover if at time elected lump sum in kind. Otherwise it’s over. |
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Advantages of NUA? |
Water to wine. Ordinary to LTcG Cost Basis is only subject to ordinary income and 10 percent penalty!!! |
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Disadvantages of NUA? |
1. No step up at death 2. LTcG treatment 3. Subject to IRD. INVOME IN RESPECT OF Decedent. |
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Triggering events for NUA |
1. Death of the plan participant 2. Total perm. Disability 3. Attainment age 59.5 4. Separation from service. Can do in multiple plans. |
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How Tax the stages of NUA? |
After distribution 1. Original taxed basis taxed in year rolls 2. Bargain element or NUa is taxed long term AnyTiMe you sell!! 3. Growth above distribution can be st or lt. |
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Who can use NUA? |
Market to executives about to retire Employees who have been laid if Employees whose company price is depressed (get them to buy a ton) HR departments Continuing ed for CPA |
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Best option strategy for diversification? |
Excercise and Sell |
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Best option strategy for tax minimization?! |
Amt minimization Tandem excercise of NSO and iso Option gifting big time Grantor CLT |
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Tandem Excercise?! For iso and NSO. What’s the goal?! |
It’s to minimize taxes on ISO excercise and hold. Bc u didn’t want the ISO to trigger cause your just holding it.
Raise ordinary income to level greater than potential AMT with combo excercise.
So downside is pay income tax now on NSO |
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