Episode 52: Top Year End Tax Planning Moves with Biden in the White House

Episode #51: Non-Qualified Stock Option Basics


 

Non-qualified stock options are a great way to incentivize and reward employees and the management of publicly traded companies. We dedicated today’s episode to exploring the basics of non-qualified stock options. Throughout the episode, Grant reviews how non-qualified stock options work, tax implications, and a few things to keep in mind if you have been granted some non-qualified stock options. Stay tuned until the end of the episode, where Grant talks about some tax planning opportunities that could help you minimize the amount of tax you have to pay in the long run.

 

Show Notes

[01:26] Introduction – Basics of options trading and how non-qualified stock options work.

[07:33] Important Terms – Grant explains a few crucial terms related to non-qualified stock options: strike price, fair market value, vesting, grant date, and expiration date.

[11:09] Taxation – How non-qualified stock options are taxed and when you will be taxed for non-qualified stock options.

[18:19] Concentration Risk – Why most people exercise and immediately sell when they are granted non-qualified stock options and how to objectively look at your company and handle the concentration risk associated with non-qualified stock options.

[21:38] Exercise and Cashless Exercise – How the two methods work and things to keep in mind when you decide which one to choose.

[25:52] 83(b) Election – 83(b) election is a provision that comes under the Internal Revenue Code that’s related to non-qualified stock options. Grant reviews how it works and how you can take advantage of it.

[31:31] Hanging on to Shares – Grant talks about when to hang on to shares and when to sell immediately.

 

Resources

How Are Non-Qualified Stock Options (NSOs) Taxed?
www.abovethecanopy.us/how-are-non-qualified-stock-options-nsos-taxed/

Posted in Company Retirement Plans, Financial Planning, Investing, Podcast, Taxes & Accounting and tagged , , .

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