M6 Employee Stock Options

Question 1

What are the two types of Employee Stock Options?

Answer 1

Nonqualified

Qualified (Incentive Stock Options ISOs, Employee Stock Purchase Plans ESPPs)

Question 2

Generally a nonqualified stock option is taxable when?

Answer 2

At the time of the great if it has a readily ascertainable value

Question 3

Nonqualified Options. Employee Taxation. If it has readily ascertainable value, when is it taxable?

Answer 3

GRANTED

Question 4

Nonqualified Options. Employee Taxation. If it does NOT have a readily ascertainable value, when is it taxable?

Answer 4

EXERCISE

Question 5

Nonqualified Options. Employer Taxation - when does the employer deduct the expense?

Answer 5

In the same year that the employee reports income

Question 6

QUALIFIED OPTIONS. ISOs and ESPPs 
Employee taxation (2)

Answer 6

NOT taxable income as compensation when granted or when exercises
Capital gain/loss when SOLD

Question 7

QUALIFIED OPTIONS. ISOs and ESPPs

Employer Taxation?

Answer 7

NO DEDUCTION