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Date:   Fri, 23 Sep 2005
From:   Santosh

Dear Mike,

Great site! I stumbled upon it from a Google search.

I work for a startup company. I received 60% of last year's bonus in cash and 40% as stock grants. My employer estimated the value of the shares as $1 per share.

Will I have to pay taxes on the stock grants?

Sincerely,

Santosh

Answer

Date:   Wed, 12 Oct 2005

Hello Santosh,

Assuming the grant was fully vested, it is taxable. Your employer should include the value of the grant on your W-2 form as part of your wages.

Good luck!

Mike Gray

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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.