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Secrets of Tax Planning For Employee Stock Options


Publisher:Silicon Valley Publishing Co.



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About the book:

Studying this book could save your family from bankruptcy and avoid severe emotional distress from unexpected tax bills!

What's been updated?

The expanded refundable minimum tax credit is no longer phased out for high-income individuals. In addition, taxpayers who paid penalties and interest relating to an alternative minimum tax for exercising an incentive stock option can recover those amounts. Knowing how to claim this credit could save you or your clients a lot of money!

Examples have been updated for more recent tax rates, and the appendix was updated to include 2008 forms, instructions and publications available at the time I finished the book, making it easier for you to apply lessons learned from our book to this year's taxes.

Special estimated tax rules enacted for 2009 for individuals who receive most of their income from a small business are explained.

New rules for expatriates who renounce their US citizenship or permanent residency are discussed. Knowing about these rules in advance could save you or your clients from making a costly mistake!

Want to protect yourself from a big drop in the stock price of your company? The section on hedging to protect against losses has been expanded.

What's included

Secrets of Tax Planning for Employee Stock Options includes explanations of employee (and independent contractor) planning for Incentive Stock Options, Non-Qualified Stock Options, Employee Stock Purchase Plans, Stock Grants and Employee Stock Ownership Plans (ESOPs).

While each of these types of plans represent significant benefits, they also include tax traps that can result in a huge tax without having the cash to pay it.

Here are some of the subjects discussed:

Incentive Stock Options

1. What are four alternative scenarios to consider when evaluating risk and tax results when planning?

2. What is the "escape hatch" and when should you use it?

3. What tax rates apply in different scenarios, and how do they relate to evaluating risk?

4. What are the mechanics of the alternative minimum tax and the minimum tax credit?

5. How does the new refundable minimum tax credit work?

6. How can the estimated tax rules be used to manage cash flow?

7. What are the tax results of "hedging" strategies?

8. What are special considerations when an early exercise is allowed?

9. What special considerations apply for "insider" stock?

10. What are the tax consequences of backdating ISOs?

Non-Qualified Stock Options

1. What general rules apply when non-qualified stock options are exercised?

2. When is stock considered "restricted," and what special elections apply in those situations?

3. When do you make a "Section 83(b)" election?

4. What are the tax consequences of a forfeiture after a Section 83(b) election has been made?

5. How must non-qualified stock options to avoid severe penalties for non-qualified deferred compensation plans under Internal Revenue Code Section 409A?

6. What are the tax consequences of backdating employee stock options?

Employee Stock Purchase Plans

1. How does an employee stock purchase plan compare to incentive stock options?

2. Does the alternative minimum tax apply to ESPPs?

Stock Grants

1. How is a stock grant taxed?

2. When would you make a Section 83(b) election for a stock grant?

3. What state tax consequences apply when an employee moves?


1. What are employee benefits of ESOPs?

2. What are the tax breaks for a sale by an existing shareholder to an ESOP?

3. What diversification elections are available for employees?

4. What are the distribution requirements after an employee retires?

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