News Archive

"If the aggregate sales price or amount of securities sold by a company in reliance on Rule 701 during any consecutive 12-month period exceeds $10 million, before the date of sale the company must provide employees with 'enhanced disclosure' ... The new CDIs (271.26 and 271.27) clarify when enhanced disclosure must be provided and the consequence of not doing so."  MORE >>

"[1] Always report stock sales on Form 8949 and Schedule D, even if you sold all the shares immediately after acquiring them.... [2] [T]he cost basis reported by your broker on Form 1099-B is likely to be too low, requiring an adjustment on Form 8949. [3] Watch for the common error of double-reporting stock comp income on Form W-2.... [4] After an exercise/hold of ISOs, always calculate your alternative minimum tax (AMT). [5] If you owe the AMT, remember to use any AMT credit you may have."  MORE >>

"Although often grouped together, RSUs, ISOs and NSOs are taxed differently and create income at different points. Understanding these differences is key to making informed equity compensation decisions."  MORE >>

"From a company perspective, lump sums are operationally simple but hit budgets immediately. Salary continuation spreads costs over time but adds administrative work....For employees with stock options ... [m]ost companies (62%) continue to rely on a 90‑day exercise window.... Nearly a third (28%) offer a tenure‑based approach with longer windows for longer service. Only 10% extend beyond 90 days, even though employees often push for more time."  MORE >>

"[1] You sold any or all of the shares at the time of RSU vesting, option exercise, or ESPP purchase ... [2] You report a stock sale with the unadjusted cost basis shown on Form 1099-B from your broker ... [3] You report W-2 income received from equity compensation ... [4] You exercised incentive stock options and held the shares ... [5] You triggered the AMT from an ISO exercise/hold in an earlier tax year."  MORE >>

"[This article summarizes] the rules related to the year-end reporting requirements for ISO exercises on Form 3921 and ESPP transfers on Form 3922, and the penalties that could apply if a corporation fails to follow these rules."  MORE >>

"Requirement to report ... Electronic delivery requirements ... Format of statement/return ... Unique account numbers ... Electronic submission of IRS returns ... Submission through FIRE ... Submission through IRIS ... Internal Revenue Code penalties for non-compliance ... Disqualifying disposition of ISO shares ... Disposition of ESPP stock."  MORE >>

"[O]ptions-only LTI plans are losing popularity, especially for non-executives. New-hire option-only grants for this group are down 11% since 2024. Refresh grants fell even faster, dropping 14% over the same period.... RSU adoption has been climbing steadily across all employee segments, with the biggest jump in refresh grants for non-executives, up 11% since 2023.... Refresh grants have gotten smaller as companies juggle valuation pressure and the cost of bigger new-hire awards."  MORE >>

"For ISO exercises and ESPP transfers occurring in the 2024 calendar year, employers should file Copy A of the applicable forms with the IRS no later than February 28, 2025, for paper filers (March 31, 2025, for electronic filers). Copy B of the forms should be distributed to affected individuals no later than January 31, 2025."  MORE >>

"[1] Last chance to correct certain Section 409A document failures discovered in 2025.... [2] Nonqualified deferred compensation deferral elections should be made on or before December 31, 2025.... [3] Take certain action to address impact of Tax Cuts and Jobs Act on Section 162(m) of the Code.... [4] Review whether equity-based compensation plans have sufficient shares remaining for 2026 awards.... [5] Review director pay practices and consider separate annual limits on director equity awards.... [6] Review ISS 2026 benchmark policy voting policies for executive compensation matters:.... [7] Section 6039 of the Code information statements due by February 2, 2026.... [8] Continue to consider clawback disclosure issues.... [9] Consider electronic filings for future Section 83(b) elections."  MORE >>

"[The] Internal Revenue Code requires that separate information returns be furnished to most U.S. taxpayers who exercised ISOs during 2025 or who transferred shares during 2025 that were acquired under an ESPP.... The deadline for furnishing Forms 3921 and 3922 to optionees and transferors is February 2, 2026. The deadline for filing Forms 3921 and 3922 with the IRS is March 2, 2026, if you physically mail the form, or March 31, 2026, if you send the form electronically."  MORE >>

"Widespread fears about a stock-price bubble surrounding the AI boom, and a potential market correction, have raised worries for employees with equity compensation. Employee stock options are especially vulnerable ... Concerns about stock markets and investing bubbles can be managed by a carefully developed long-term financial plan for equity compensation and company shares[.]"  MORE >>

"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 >>