Can I transfer a non-qualified stock option to my child’s college fund?

March 10, 2004

Date:   Mon, 01 Mar 2004
From:   John

Great site with very valuable information. I don’t know if you still answer general NQSO questions, but I thought I would ask anyway.

I am about to exercise an NQSO and will be using the funds to put into a college fund for my child. Are there any tax advantages to transferring the stock to him and letting him exercise?


Date:   Thu, 04 Mar 2004

Hello John,

You will still be subject to income tax on the excess of the fair market value of the stock received over the option price. There is an estate planning advantage of shifting the stock to him while paying the tax on the exercise, but it could create a financial hardship for you if you don’t have much cash for paying the taxes.

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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