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Date:   Thu, 18 Aug 2005
From:   Edwin

Michael,

I joined an investment banking firm where part of our compensation includes warrants. How are these taxed?

Much thanks,

Edwin

Answer

Date:   Wed, 12 Oct 2005

Hello Edwin,

If the warrants can be traded on a public market, they are taxable based on the market price.

If the warrants are personal and can't be traded, they are taxed as non-qualified stock options. See our special report, Executive Tax Planning for Non-Qualified Stock Options.

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.