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Advisors’ Concerns About Market Valuations Affecting Option Strategies

"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[.]"

Taming Your Emotions in Financial Planning for Equity Comp

"[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."

2025 Year-End Planning Issues for Nonqualified Retirement Plans

"IRS just released the 2026 contribution limits for qualified retirement plans. Knowing those limits, which are adjusted annually for inflation, is crucial to decision-making about nonqualified deferrals for the many employees and executives who are eligible to participate in company NQDC plans.... You may have an extra incentive to defer taxable income if you believe you will be in a higher income-tax bracket in 2026 than you are in 2025 ... While the income-tax rates for most taxpayers with MAGI of over $500,000 are 35% and 37% (the top two brackets), the SALT deduction phaseout can push your actual marginal tax rate to almost 46%."

Employees with ESPP Purchases During Stock Market Drop Reaped Big Gains In Rebound

"Employees at companies with ESPP purchases during the stock-market lows of March and April 2020 experienced meaningful gains of over 40% in the market rebound as of mid-June ... ESPPs with a discount and a lookback feature are a good deal even in a down market. This discount calculation would come off of the lower purchase date price, even without a lookback."

ESPPs Offer Special Benefits in Down and Volatile Markets

"Companies have well-established choices for handling employee stock option grants in which the market price of the company's stock is cheaper than the option exercise price, temporarily making the options worthless. But how do falling stock prices affect other forms of equity compensation?"

Capital Gains Tax Tug-of-War: Democratic Presidential Candidates, Trump's Indexing, and IRS Forms

"Democratic presidential candidates are proposing changes in capital gains tax to boost federal revenue. At the same time, pulling in the opposite direction, the Trump White House is considering an executive order to require the US Treasury to index capital gains for inflation, effectively resulting in a tax cut for investors ... [An] employee incurs a capital gain or loss when selling company shares acquired from stock option exercises, restricted stock/RSU vesting, or ESPP purchases, even if the number of shares is small."

Restricted Stock, Restricted Stock Units, Restricted Securities: Understanding the Differences and Why They Matter

"[Restricted Stock Units (RSUs)] are now the most frequently granted equity awards in public companies. However, companies, employees, and financial advisors often call RSUs 'restricted stock' or 'restricted securities.' ... [T]hose three things are not the same. As a lawsuit by current and former Uber employees shows, it's important to know what type of stock grant you have and its tax treatment."

IRS Guidance on Private Company Grants of Stock Options and RSUs Provides Limited Support

"To make qualified equity grants, the company must issue grants to at least 80% of employees in a single calendar year. The law does not provide for a cumulative basis that considers grants from prior years.... This makes it more difficult for early-stage startups, as they primarily make new-hire grants, not annual grants that can more easily fit into a calendar year."

Year-End Checklist for Stock Options, Restricted Stock, and ESPPs

"[1] Should you plan for tax-law changes by Congress? ... [2] Income-shifting and multi-year planning ... [3] Withholding may not cover taxes owed ... [4] Incentive stock options ... [5] Year-end planning for pre-IPO and IPO companies ... [6] Confirm dates for exercise and vesting: 2021 or 2022?"

Tax-Return Errors to Avoid with Employee Stock Purchase Plans

"[1] Paying tax too early on the discount.... [2] Not filing Form 8949 after an immediate sale of ESPP shares at purchase.... [3] Directly using what appears as the cost basis on your Form 1099-B.... [4] Paying the wrong tax on the discount.... [5] Using the wrong price when there is no lookback.... [6] Paying tax twice on the discount."