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Date:   Fri, 3 Dec 1999
From:   Clare

Question:

My husband's company is being acquired and all of his incentive stock options (both qualified and nonqualified) are becoming vested immediately. The closing date for the sale is December 6, 1999. Will he have W2 income reported related to the nonqualified stock options for 1999? I don't think he has exercised any of his options though he may currently be vested in some of them. It's confusing because all of his options are vesting as a result of the sale of the company.

Thank you.

-Clare

Answer

Date:   20 Dec 1999

Hello Clare,

The vesting of your husband's options will not result in a tax.

The tax doesn't result until the options are exercised.

One of the consequences of this accelerated vesting may be that some of his incentive stock options could become nonqualified options.

For more details, you really should consult with a tax professional.

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.