Is any tax due at the time of receipt?

July 23, 2001

Subject:   NSOs for service providers
Date:   Wed, 11 Oct 2000
From:   Paul

Thanks for providing a great informational site.

I have a quick question. If a service provider, such as an Advisor or consultant, to an early stage (pre-venture capital, or just about to receive venture capital) company receives NSOs as a form a compensation, is there a tax event at the time of receipt or the time of exercise of the options? My understanding is that as long as there is no market for the options and therefore no readily ascertainable market value at the time of receipt, then the tax is paid at the time of exercise. Is that correct?




Date:   4 Dec 2000

Hello Paul,

Yes. There generally is no taxable income when non-qualified options are granted.

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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