"In July 2025, the 'One Big Beautiful Bill' Act of 2025 (OBBBA) made permanent the tax rates of the Tax Cuts & Jobs Act (TCJA) that were set to expire at the end of 2025. However, it also brought some changes that may affect planning for equity comp and company shares at year-end 2025.... [myStockOptions] asked many leading financial advisors, from different regions of the United States, for their ideas on financial and tax planning for the end of this year and the start of the next. [This article provides] their selected responses, presented in their own words." MORE >>
"When you are evaluating whether to exercise stock options or sell shares from vested restricted stock/RSUs or an ESPP, you want to consider the thresholds that may trigger higher tax rates for you either this year or next. Assess whether you should defer income into next year or accelerate income into this year. Project your income from equity awards to see whether it will trigger the additional Medicare taxes on high incomes this year or next year." MORE >>
"While many employees focus on the upside possibilities, few understand in detail how ISOs function or the critical role that taxes play in shaping their real take-home value. Advisors are uniquely positioned to help clients navigate these complexities, especially since poor planning around ISO exercises can create a substantial tax liability without generating the liquidity to pay it, thereby jeopardizing other aspects of the financial plan." MORE >>
"[1] Seeking a 'Scenario of Least Regret' To manage emotions In financial planning ... [2] Dealing with FOMO (Fear Of Missing Out) ... [3] Reframing overconfidence by considering what you have to lose ... [4] Overcoming inertia ... [5] Using a 'legacy anchor position' to provide psychological safety." MORE >>
"While it's a good idea to have a plan for any equity awards, tax planning is especially crucial for incentive stock options (ISOs). The special tax treatment that ISOs offer under the tax code is offset by the tradeoff of risk and more complicated taxation." MORE >>
"As perceptions of performance-based LTI continue to evolve among investors and companies, if ISS responds with a policy change modifying its performance-based LTI policy to credit long-horizon restricted stock as performance-based, we will likely see an uptick in the use of restricted stock at the top officer level.... [This may be] accompanied by a resurgence in companies using stock options for top officer grants. Stock options would enable companies to maintain higher levels of LTI program upside leverage, while still appealing to a broader range of investors evaluating a company's LTI program as performance-based." MORE >>
"The scope of NQDC subject to FICA taxation is broad, including voluntary deferrals of salary, restricted stock units and performance stock units with deferral features, SERPs, and certain deferred bonuses. Understanding when FICA tax applies to NQDC, and how to take advantage of FICA tax timing rules, can help employers avoid errors when administering their NQDC arrangements." MORE >>
"When you exercise ISOs, no federal income tax is withheld, and you never owe Social Security and Medicare taxes. What matters for ISO taxes is how long you hold the shares that you acquire after exercise. The best tax treatment occurs when you meet the two holding periods for the stock: at least [1] two years from the date of grant and [2] one year from the date of exercise." MORE >>
"Pursuant to Code Section 83(b)(2), the election must be made not later than 30 days after the date of the Restricted Property transfer (i.e., the date of receipt by the service provider from the company). Late elections are not permitted.... While the online election mechanism will ease administrative difficulties for service providers, timely and proper filing remain critical components." MORE >>
"Company equity is a powerful tool for compensating employees, attracting investors, and aligning the interests of key stakeholders with the long-term goals of the business. It is also a complex area that requires careful planning and consideration to avoid common pitfalls. Founders should consider the equity as a resource that dilutes existing ownership and look at the long-term implications of their decisions to allocate equity." MORE >>
"The 'One Big Beautiful Bill Act of 2025' (OBBBA) made permanent many of the tax provisions in the Tax Cuts & Jobs Act of 2017 (TCJA) that relate to stock comp planning, with a few changes.... This quiz is also a course of study. The answer key links to content on the topic for follow-up reading." MORE >>
"From early-stage biotech startups to publicly traded life sciences firms, companies ... use equity-based compensation (e.g., stock options, restricted stock units (RSUs)) and nonqualified deferred compensation (NQDC) to attract and retain top scientific and executive talent. However, without careful legal structuring and administration, these arrangements can easily run afoul of Section 409A of the Internal Revenue Code (IRC), triggering steep tax penalties and administrative exposure." MORE >>
"[T]he 2025 tax law ... [includes] changes that influence the calculation of the alternative minimum tax (AMT), most notably in the significantly raised cap on state and local tax (SALT) deductions. Other provisions in the law concern the special tax treatment for startup company stock and tax planning around charitable donations. Some of these new provisions will become effective in 2026. Others take effect sooner." MORE >>
"Although the IRS previously required taxpayers to submit section 83(b) elections via physical mail, the IRS now permits taxpayers to submit Form 15620 online via the IRS website. Because of the importance of making a proper and timely section 83(b) election, taxpayers should consider making any such elections online." MORE >>
"[T]his article identifies key issues and decision points related to executive equity and outstanding equity awards, highlighting the importance of the difference between how equity awards must be treated (mandatory) and what can be negotiated (discretionary). This article also discusses how the Internal Revenue Code impacts a company's decisions about equity and outstanding equity awards in the context of an executive's termination from employment." MORE >>
"[1] Rates and brackets of individual income tax ... [2] The calculation of the alternative minimum tax (AMT) ... [3] Trigger point for the 20% tax rate on long-term capital gains ... [4] Estate planning and charitable contributions ... [5] Qualified small business stock (QSBS) ... [6] Section 83(i) tax-qualified stock grants for private companies ... [7] Performance-based exception to section 162(m) limit on deductible comp." MORE >>
"Many early-stage companies give employees, consultants, advisors, board members and other service providers an opportunity to own a stake in the company through the grant of compensatory stock options.... This article explains why companies grant options to service providers and summarizes the key differences between the two types of options: incentive stock options (ISOs) and non-qualified stock options (NSOs)." MORE >>
"Questions to ask before RSU vesting ... [1] Tax-withholding trap at RSU vesting ... [2] RSU vesting years: reduce taxable income ... [3] Hold or sell the stock at vesting? ... [4] RSU selling plans impacted by insider-trading rules ... [5] RSU taxes can motivate diversification." MORE >>
"[T]he 83(b) election provides for potential tax savings, both up-front and in total.... [T]he employee should consider whether they will remain employed at the company meeting performance metrics during the vesting period, if the company's stock valuation is expected to increase, and if the tax liability associated with the election is affordable." MORE >>
"Donating wealth to charities and passing it along to future generations are important financial goals. What planning techniques are optimal if a large portion of your wealth comes from stock compensation?" MORE >>
"You have received this form because [1] your employer (or its transfer agent) has recorded a first transfer of legal title of stock you acquired pursuant to your exercise of an option granted under an employee stock purchase plan, and [2] the exercise price was less than 100% of the value of the stock on the date shown in box 1 or was not fixed or determinable on that date.... [Y]ou must recognize (report) gain or loss on your tax return for the year in which you sell or otherwise dispose of the stock. Keep this form and use it to figure the gain or loss." MORE >>
"Non-qualified stock options grant employees and certain non-employees, such as consultants and board members, the right to purchase company shares at a fixed price within a set timeframe. The strike price, determined by the company's 409A valuation or fair market value, remains fixed, allowing individuals to potentially profit if the share price increases over time." MORE >>
"Are there forms of equity compensation that are tax-advantageous or disadvantageous to employees or employers? ... Does equity-based compensation require registration or notice? Are exemptions, or simplified or expedited procedures available? ... Are there tax withholding requirements for equity-based awards? ... Are inter-company chargeback agreements between a non-local parent company and local affiliate common? What issues arise? ... Are employee stock purchase plans prevalent or available? If so, are there any frequently encountered issues with such arrangements?" MORE >>
