Recommend Our Site to Your Friends!

Print This Page

Subject:   NSOs for service providers
Date:   Wed, 11 Oct 2000
From:   Paul

Thanks for providing a great informational site.

I have a quick question. If a service provider, such as an Advisor or consultant, to an early stage (pre-venture capital, or just about to receive venture capital) company receives NSOs as a form a compensation, is there a tax event at the time of receipt or the time of exercise of the options? My understanding is that as long as there is no market for the options and therefore no readily ascertainable market value at the time of receipt, then the tax is paid at the time of exercise. Is that correct?

Thanks.

Paul

Answer

Date:   4 Dec 2000

Hello Paul,

Yes. There generally is no taxable income when non-qualified options are granted.

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.