Print This Page

Date:   Fri, 14 Jul 2006
From:   John

Michael:

Would you say that a person who is granted options on January 1, 2000 and exercises and sells on January 1, 2005 receives compensation on January 1, 2005 or January 1, 2000?

Answer

Date:   09 Aug 2006

Hello John,

Assuming the options are non-qualified stock options, fully vested on January 1, 2005, that is the date that taxable compensation is received.

Good luck!

Mike Gray

For more answers to our readers' questions and to learn about new tax developments relating to employee stock options, subscribe to our newsletter, Michael Gray, CPA's Option Alert!

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained in this answer was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.