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Date:   Thu, 26 Aug 2004
From:   Richard

If a person was to consider swapping $50,000 of X company stock to exercise his ISOs, assuming the stock was obtained through a past NQ option, does the 50,000 worth of stock need to have been held for one year and held from two years since it was granted? Or does this only apply to stock that was previously obtained through an ISO?

Answer

Date:   Fri, 10 Sep 2004

Hello Richard,

The holding period rules don't apply to stock acquired from a non-qualified option, so you don't have to hold that non- qualified option stock for that period in order to do the swap. If the non-qualified option was vested and the stock was vested, then when you exercise the non-qualified option, the acquisition date for the NQO stock is the date of exercise of the non- qualified option.

Good luck!

Mike Gray

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

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.