Will there be any tax implications when I am given stock options?
July 16, 2001
Subject: Tax implications upon receipt of stock options
Date: 17 Nov 2000
I am considering an employment offer from a start-up high tech company. The company is self-funded and has not IPO’ed. Part of the offer is a grant of company stock options, which will be made upon my employment. I do not know if these will be Incentive or Non-qualified (but will find out). There is a 4-year, incremental vesting period for these options. The initial vesting period is 1 year.
My main concern is will there be any tax implications to me when I am given the stock options? I have read somewhere that they may be subject to employment taxes because they are considered compensation. I have also checked with some friends who are financial professionals, however, they have given confusing and conflicting responses.
… I’m hoping for just a ballpark estimate of the outcome. Next year will be a very expensive year for me financially, and I want to make sure I have as few surprises as possible.
Thanks for your help.
Date: 04 Dec 2000
There is generally no tax consequence from being merely granted employee stock options.
Consider buying a book, such as Employee Stock Options, to better understand the issues. For a detailed examination of your situation, you should consult with a tax advisor.