Tag Archives | stock options

Dan Zajac, philadelphia financial advisor

Managing Concentrated Equity in Company Stock and Stock Options

Concentrated equity, also known as owning a large position in one company stock, can exist in many forms. One form of concentrated equity may be the result of working for an employer who has issued stock ownership via restricted stock and stock options. These types of stock ownership and stock rights allow an employee to […]

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Dan Zajac, philadelphia financial advisor

Using After-Tax Value to Evaluate Liquidation Priority of Concentrated Equity

Concentrated equity can be defined as owning a substantial position in one company’s stock.  For such concentrated positions, one risk for a single owner may be a lack of diversification*.  Or said another way, having too many eggs in one basket. However, concentration risk may not be a bad thing. In fact, concentration in one company stock […]

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Dan Zajac, philadelphia financial advisor

6 Strategies to Exercise Your Employee Stock Options

The choice to exercise your employee stock options can be a difficult one, regardless of whether you have incentive stock options or non-qualified stock options. Difficult because of the potential complexities of exercise and technical jargon required in the process. Other issues may be particularly paralyzing due to behavioral influences. For example, personal beliefs that the […]

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Dan Zajac, philadelphia financial advisor

Exploring the Details of A Cash Exercise of Stock Options

When it’s time to exercise your employer-provided stock options, you generally have one of two options: a cash exercise or a cashless exercise. You may choose a cash exercise in the hope of achieving preferential long-term capital gains treatment on further appreciation of the stock. In addition, you choose a cash exercise in order to […]

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The Math Behind a Cashless Exercise of Non-Qualified Stock Options

When the time comes to exercise non-qualified stock options, the question of whether to perform a cash exercise or a cashless exercise is a common one. In many cases, option holders default into a cashless exercise—and for good reason. Among other things, a cashless exercise may be an easy option and may result in zero […]

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Dan Zajac, philadelphia financial advisor

Selling Incentive Stock Option Shares To Accelerate Tax Credits

Incentive stock options may provide for the opportunity to pay taxes on the gain at long term capital gains rates instead of at ordinary income rates if exercised following the rules for a qualifying disposition.  Because of this potential tax advantage, many will attempt to meet the standard for qualifying in order to “save” on […]

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Dan Zajac, philadelphia financial advisor

4 Questions to Ask When Your Employer Stock Options Vest

Employer stock options are often issued as part of an employee compensation package to reward and retain key employees. If the company does well, the employee also does well through an appreciating stock price. However, employer stock options may also apply the proverbial golden handcuffs to an employee.  Leave the company before the options vest […]

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exercise incentive stock options and AMT

Why Exercising Your Incentive Stock Options Early May Be the Best Strategy

In lieu of intentionally exercising for a strategic reason, incentive stock options (ISOs) are often held until near expiration.  At which point, at the risk of expiring and losing all value, the recipient of the incentive stock options will likely choose to exercise. Upon exercise, tax reporting will occur.  Exactly what reporting occurs and the […]

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Dan Zajac, philadelphia financial advisor

The Basics of Non-Qualified Stock Options

Non-qualified stock options are unique in that they retain tax characteristics similar to restricted stock and employee control similar to incentive stock. One might say that they fall right in the middle of these two. From a tax standpoint, gains are subject to ordinary income tax rates.  In terms of control, employees have the ability […]

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ISOs and stock options

The Basics of Incentive Stock Options

There is nothing basic about incentive stock options. Incentive stock options have built-in complexity that goes far beyond their restricted stock and non-qualified stock option cousins. The holding requirements for qualified dispositions and alternative minimum taxes are two complexities that quickly come to mind. If you find yourself on the receiving end of incentive stock […]

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