How are held NQSOs taxed when they’re sold?

October 10, 2014

Subject:   Sale of purchased and held NQO’s
Date:   17 Mar 2012
From:   Richard


Thanks for your advice. I enjoy reading your website information

I recently purchased vested NQO shares in my company and paid the appropriate withholding taxes. I plan to hold the shares. The price has already risen 15% since exercised, and future forecasts look favorable. I am waiting for a rainy day to sell the shares when the stock hits my target price.

When I sell, will I need to pay tax again on the difference between the option strike price and the current fair market value at sale, or just on the incremental gain since the purchase?




Date:   06 Jun 2012

Hello Richard,

Just the incremental gain since the purchase.

The amount reported as income from the exercise of the option is added to the tax basis (cost for computing taxable gain or loss) of the stock.

See our free report, “Nonqualifed Stock Options – Executive Tax and Financial Planning Strategies” at

Best wishes,

Mike Gray

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

Comments are closed.