Subject:   Non-qualified stock options in private company
Date:   Tue, 18 Dec 2001
From:   Randy

Mike,

Hello! I have a NQSO question for you. I’ve been browsing the internet for information on NQSOs and the tax consequences, however I have yet to find a similar situation to mine. I have a large number of stock options that will be expiring next year. I don’t have the cash to pay the taxes on the gains even at the current prices (FMV) and since the stock is in a private company, the shares are restricted so I can’t just liquidate an amount to pay the taxes. Any advice?

Thanks,
Randy

Answer

Hello Randy,

If you don’t have the cash to pay the taxes, maybe it’s best to pass on exercising the options.

Despite the “upside” potential, I don’t think it’s wise to put yourself in financial distress for this “benefit”.

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”.