What happens if I transfer NQSOs to my kids?
September 30, 2011
Subject: non-qualified stock options
Date: 5 Feb 2009
Dear Mr. Gray,
What would be the tax consequence if I transferred non-qualified options to my children and they sell them?
Will there be a tax benefit of having the income taxed at a lower tax bracket on their income tax returns?
Please give me your advice. Thanks in advance.
Date: 4 Mar 2009
The ordinary income from exercising the stock options will be included in your wages on your Form W-2. There is no income tax savings from this transfer.
You might have some estate and gift tax savings from making the transfer. Valuing the options for a taxable gift is a complicated and expensive exercise. If you decide to pursue this further, be sure to get professional help.