What taxes are due on ISO same day sales?
July 23, 2001
Date: Thu, 7 Jun 2001
What taxes are due on ISO same-day exercise/sale? My company’s “model” for calculating taxes includes Social Security, SDI, etc. I thought ISO sales were only subject to Federal Income Tax (with possible AMT) and State Income Tax. Your help appreciated. Thanks.
Date: Mon, 9 Jul 2001
The IRS issued an announcement early this year that they won’t impose penalties on employers who do not withhold taxes or pay employment taxes with respect to early dispositions of ISO stock. This suspension of penalties is effective for options exercised before January 1, 2003.
In other words, no withholding or employment taxes apply.
Tell your employer to refer to Treasury Notice 2001-14.