What is the difference between exercising now and later?
September 18, 2006
Date: Wed, 12 Apr 2006
I need clarification on these facts:
Non-qualified Option for 1,000 shares @ $20
Current fair market value $35
Expected price in 2007 $50
If I make a same day sale in 2007, my ordinary income would be ($50-$20)x1,000 = $30,000. If I exercise the options today and keep them for more than one year, I would report ($35-$20)x1,0000 = $15,000 ordinary income for the current year and ($50- $35)x1,000 = $15,000 long-term capital gains next year.
Is this right?
Date: 01 May 2006