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I cashed in options that were given to me by my ...

I cashed in options that...
I cashed in options that were given to me by my employer. They normally take out taxes however they no longer do this. I put most of the monies in my kids vanguard college accounts. Do I have to pay taxes on that?
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Answered in 15 minutes by:
4/1/2008
Bill
Bill, Enrolled Agent
Category: Tax
Satisfied Customers: 3,153
Experience: EA, CEBS - 35 years experience providing financial advice
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Yes, you will have to pay taxes on the difference between the market value of the stock and your cost for exercising on the date they were exercised if they were nonstatutory stock options (NSOs). If they were NSOs, then your employer was required to include the difference on your W-2. If they were incentive stock options then they are not taxable when they are exercised but the difference between the sales proceeds when sold and the exercise price when exercised is taxable as gain or loss.

See pages 10 - 11 - http://www.irs.gov/pub/irs-pdf/p525.pdf

 

Bill
Bill, Enrolled Agent
Category: Tax
Satisfied Customers: 3,153
Experience: EA, CEBS - 35 years experience providing financial advice
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