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Subject:   Gifting Options to someone overseas
Date:   Wed, 5 Jan 2000
From:   Anonymous

Hello,

Is it possible to gift options to my parents who live overseas, who can then exercise to buy those shares? They will probably hold onto them for long enough to minimize their tax implications. In their case, if they hold onto some security for over a year they face a 0% tax.

That is something that I would like to pursue if possible.

Thanks!

Answer

Date:   9 Jan 2000

Hello,

It is possible to make a gift of non-qualified options to family members.

The transfer may be subject to U.S. gift tax. Valuing the gift may be a complicated exercise. The U.S. Gift Tax Return is Form 709.

Some states also have gift taxes.

The income tax result is you will still report compensation income when the options are exercised, and pay U.S. tax on your individual income tax returns. Your employer will get a tax deduction for the compensation. LTR 9722022.

Good luck!

Mike Gray

For more information about non-qualified stock options, request our free report, Non-Qualified 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.