What happens if I transfer NQSOs to my kids?

September 30, 2011

Subject:   non-qualified stock options
Date:   5 Feb 2009
From:   Tae-Won

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

Hello Tae-Wan,

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.

Good luck!

Mike Gray

For more information about non-qualified stock options, request our free report “Executive Tax and Financial Planning For Non-Qualified Stock Options”.

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