Members JacieFB Posted March 19, 2009 Members Share Posted March 19, 2009 Specifically, if I'm given the choice between ISOs and NQSOs, which do I want and why? We may want to take this to PM, but my employer (a startup company) is coming through on a promise to give me stock options. As I understand it, he's giving me the choice of ISO and NQSO. What kind of questions should I be asking myself in order do decide? Thanks in advance! Link to comment Share on other sites More sharing options...
Members Emprov Posted March 19, 2009 Members Share Posted March 19, 2009 I've only had Non-Qual's, not sure about the Incentives -- either way you pay only on your gains but the tax rates vary, depending on how you handle them. If you have a tax guy, it'd probably be a good idea to talk to them about it to help you with your decision. If you don't have a tax guy, and you're going to be getting options, I'd suggest you find a tax guy. Link to comment Share on other sites More sharing options...
Members PaulyWally Posted March 19, 2009 Members Share Posted March 19, 2009 Basically (I could be wrong, but this is how I understand it)... ISOs are not taxed until they are sold. And when they are, they are generally treated as long-term capital gains. NQSOs are considered additions to your income... meaning, you'll get taxed when you receive them. So suppose the stock is worth $1000 when it is given to you. With NQSOs that $1000 will get added as part of your income. But if you opt to receive $1000 worth of ISOs, and in 20 years you sell it when it's worth $100,000. You'll get taxed on that $100,000 as long term capital gains. On the other hand, it could stay at $1000... or even tank and be a complete loss. Each has other advantages and disadvantages. And I really don't know a whole lot more than what I just wrote. I'm sure you could find lots of info online about them if you do a quick seaerch. In fact, I just looked at Wikipedia and there's some basic info there. Link to comment Share on other sites More sharing options...
Members Emprov Posted March 19, 2009 Members Share Posted March 19, 2009 NQSOs are considered additions to your income... meaning, you'll get taxed when you receive them.So suppose the stock is worth $1000 when it is given to you. With NQSOs that $1000 will get added as part of your income. NQ's are only considered income when you buy them. You can receive the options and let them expire without every exercising them and it won't have any tax implications whatsoever. Right now, I have some that are under water by a pretty good margin and they're getting ready to expire. Obviously, I'm letting them go and it'll be like nothing ever happened as far as my finances are concerned. Link to comment Share on other sites More sharing options...
Members PaulyWally Posted March 19, 2009 Members Share Posted March 19, 2009 NQ's are only considered income when you buy them. You can receive the options and let them expire without every exercising them and it won't have any tax implications whatsoever. Right now, I have some that are under water by a pretty good margin and they're getting ready to expire. Obviously, I'm letting them go and it'll be like nothing ever happened as far as my finances are concerned. Thanks for the clarification. Admittedly, I don't know the nuts and bolts. Link to comment Share on other sites More sharing options...
Members Johnny_Crab Posted March 19, 2009 Members Share Posted March 19, 2009 and other stuff? Go herehttp://www.tickerforum.org/cgi-ticker/akcs-wwwhttp://market-ticker.org/and learn. If you REALLY want to learn, "donate" the $$(as in membership) and have access to a LOT more info and videos(reading charts, why something took off or not, etc.). I pay the $. Link to comment Share on other sites More sharing options...
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