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Subject:   Question re: gifting
Date:   Thu, 24 Aug 2000
From:   Steve

Hi Michael,

Thank you for allowing me to present my question to you. I'm going to do a "Cashless Same Day Sale." One question came to my mind re. gifting of stock options.

My wife has an L2 visa which doesn't allow her to have a SSN (and therefore doesn't allow her to work in US) but she does have an ITIN.

I was wondering if there are tax advantages if I exercise my stocks, give them to my wife as a gift and she would do the sale transaction?

Please let me know.

Thanks,
Steve

Answer

Date:   11 Sept 2000

Hello Steve,

There would be no income tax advantage in making a gift of the option to your wife before exercising it.

Your employer would still be required to report the ordinary income on your W-2.

You also have special gift and estate planning issues to deal with because your wife is not a citizen. I recommend that you consult with an estate planning attorney about this soon.

Good luck!

Mike Gray

For more information about incentive stock options, request our free report, Incentive Stock Options - Executive Tax and Financial Planning Strategies.

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.