Subject:   Question re: gifting
Date:   Thu, 24 Aug 2000
From:   Steve

Hi Michael,

Thank you for allowing me to present my question to you. I’m going to do a “Cashless Same Day Sale.” One question came to my mind re. gifting of stock options.

My wife has an L2 visa which doesn’t allow her to have a SSN (and therefore doesn’t allow her to work in US) but she does have an ITIN.

I was wondering if there are tax advantages if I exercise my stocks, give them to my wife as a gift and she would do the sale transaction?

Please let me know.

Thanks,
Steve

Answer

Date:   11 Sept 2000

Hello Steve,

There would be no income tax advantage in making a gift of the option to your wife before exercising it.

Your employer would still be required to report the ordinary income on your W-2.

You also have special gift and estate planning issues to deal with because your wife is not a citizen. I recommend that you consult with an estate planning attorney about this soon.

Good luck!

Mike Gray

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