Taxation: Stock Options Flashcards Preview

Yaeger REG > Taxation: Stock Options > Flashcards

Flashcards in Taxation: Stock Options Deck (29)
Loading flashcards...
1
Q

Another name for incentive stock options

A

Qualified stock options

2
Q

Incentive stock options:

When exercised there is…

A

No taxable income

3
Q

Incentive stock options:

Basis of stock

A

Basis of stock = option price (exercise price)

4
Q

Incentive stock options:

When stock is sold…

A

Gain is long term capital gain

5
Q

Incentive stock options:

The date options were granted to the date the stock was sold…

A

At least 2 years

6
Q

Incentive stock options:

Date of exercise to date stock was sold…

A

Must be at least 1 year

7
Q

NonQualified stock option plan:

If stock is held over 12 months?

Under 12 months?

A

Over 12 = LT capital gain

Under 12 months = ST capital gain

8
Q

There is no income in incentive plan at…

A

Exercise date of option

9
Q

An incentive stock option receives…

A

Favorable tax treatment

10
Q

Incentive stock option plan:

The option must meet certain…

A

Technical requirements to qualify

11
Q

Incentive stock option plan: no income is recognized by employee when..,

A

Option is granted or exercised

12
Q

Incentive stock option plan:

If employee holds the stock acquired through exercise of the option at least 2 years from the date the option was granted and holds the stock itself at least 1 year…2

A

1 employee’s realized gain is LT capital gain

2 employer receives no deduction

13
Q

Incentive stock option plan:

If the holding period requirements are not met, the employee has…

A

Ordinary income to extent that FMV at date of exercise exceeds
The option price

14
Q

Incentive stock option plan:

If the holding period requirements above are not met, the employee has ordinary income to the extent that the FMV at date of exercise exceeds the option price. The remainder of…

A

Gain is ST or LT capital gain

15
Q

Incentive stock option plan:

If the holding period requirements above are not met, the employee has ordinary income to the extent that the FMV at date of exercise exceeds the option price. The employer…

A

Employer receives deduction receives deduction equal to amount employee reports as ordinary income

16
Q

An incentive stock option may be treated as…

A

A NonQualified stock option if corporation elects at time option is issued

17
Q

NonQualified stock option is included…

A

In income when received if option has determinable FMV

18
Q

NonQualified stock option:

If option has no ascertainable FV when received then…

A

income arises when option is exercised

19
Q

NonQualified stock option:

If option has no ascertainable FV when received then income arises when option is exercised to the extent of…

A

Taxable income = (FV when exercised) - (option price)

20
Q

NonQualified stock option:

Amount of income recognized (at receipt or when recognized) is…2

A

1 treated as ordinary income to employee and

2 employer is allowed deduction equal to amount included in employee’s income

21
Q

Employee stock purchase plan that does not…

A

Discriminate against rank and file employees

22
Q

Employee stock purchase plan:

There is no income when…

A

Employee receives or exercises option

23
Q

Employee stock purchase plan:

Conditions for holding period 2

A

1 employer holds stock at least 2 years after option is granted
And

2 at least 1 year after exercise

24
Q

Employee stock purchase plan:

If the employee holds the stock for at least 2 years after the option is granted and at least 1 year after exercise then employee has…

A

Ordinary income

25
Q

Employee stock purchase plan:

If employee holds stock for required time the employee has ordinary income to the extent of the lesser of…2

A

1 FMV at time option granted over option price or

2 FMV at disposition over option price

26
Q

Employee stock purchase plan:

Capital gains are recognized to the extent…

A

Gain exceeds ordinary income

27
Q

Employee stock purchase plan:

If stock is not held, the employee has…2

A

1 Ordinary income at time of sake for difference between FV when exercised and option price

2 amount of ordinary income increases basis

28
Q

Employee stock purchase plan:

If the stock is not held for the required time, the capital gain or loss is…

A

For the difference between selling price and increased basis

29
Q

Incentive stock options are offered to…

A

All employees

Decks in Yaeger REG Class (77):