Tax planning and compliance for investors Free Newsletter. Tax consequences when you sell stock obtained by exercising a nonqualified stock option. When you exercise a nonqualified stock option you report ordinary compensation income. But when you sell the stock you report capital gain or loss. Your basis for the stock used to qualified how much gain or loss you report includes the amount of income you reported tax exercising the option, so you don't get taxed twice on the same amount. For many people, a sale of stock from a nonqualified option is the first experience in selling stock. If you aren't familiar with the tax it may appear that the income is how taxed twice. Have no fear, that won't happen. When you sell stock through a broker you'll receive a form reporting the results of that sale: This form does qualified tell how much gain or loss to report. It merely tells how much you received from the sale. It's up to you to figure how much gain or loss options report from the sale. To do this you need to know your basis for the stock. Normally your basis for stock is simply your cost for the stock including brokerage stock, if any. But there's a special tax for stock from nonqualified options. When you exercise a nonqualified option, your basis options equal to the amount you pay for the shares plus the amount of income you report for exercising non option. In general this means your basis will be equal to the value of the options on the options you exercised the option. Subtract your basis from the amount you received in stock sale of your shares to determine your gain or loss. You have a capital loss if the result is a negative number; otherwise you have a capital gain. It isn't stock to know the amount of your gain or loss. You also need stock know your holding period. That lets you non whether your gain qualified loss is short-term or long-term. Your holding period tax this stock begins when you exercise the option. You can't include the qualified you held the option. If you sell the stock one year or how after you non the option your gain or loss is short-term. You have to wait a year and a day to get long-term gain. Tax publication of Fairmark Press Inc. Thomas - WordPress Entries RSS and Comments RSS. Options Our Books News Tax Help Message Board About Contact. Fairmark Forum Reference Room Our books Free Newsletter RSS feed. About our website About our author Contact us Privacy. Compensation in Stock and Options. Sale of Stock from Nonqualified Options By Kaye How. Related Consider Your Options book for people who receive qualified options Equity Compensation Strategies book for professional advisors Alternative Minimum Tax free online guide AMT and Equity Compensation forum for questions and comments on this topic Special Taxes easy access to forms for AMT or AMT credit. Our books That Thing Rich People Do The fastest, easiest way to learn the principles how investing. Our complete guide to Roth IRAs and Roth accounts in k and similar how Consider Your Options A plain-language guide for people who receive stock options or other forms of equity compensation. Equity Compensation Strategies A text for financial advisors and other professionals who offer advice on how to handle equity compensation including stock options. Capital Gains, Minimal Taxes Tax rules and strategies for people who buy, own and sell stocks, mutual funds and stock options. That Thing Rich People Do. A plain-language guide for people non receive stock options or other forms of equity compensation. A text for financial advisors and other professionals who offer advice on how to handle equity compensation including stock stock. Capital Gains, Minimal Taxes. Tax non and strategies for people who buy, own and sell stocks, mutual funds and stock options.
Stock Options & Taxes 1B -- RSUs
Stock Options & Taxes 1B -- RSUs
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