Serving the san francisco bay area + beyond since 1976
Serving the san francisco bay area + beyond since 1976
50
years
EST. 1976
STOCK + EQUITY COMPENSATION
Equity Compensation Tax
Understand the Tax Consequences Before You Exercise or Sell
Your compensation may be creating wealth while also creating a tax obligation.
ISOs, NSOs, RSUs, ESPPs, concentrated stock positions, and liquidity events can involve ordinary income, capital gains, withholding, and Alternative Minimum Tax considerations.
The goal:
Fewer unexpected tax bills.
More informed decisions.
about your equity and wealth.
B+Co helps you model potential tax outcomes before important decisions are made so youcan better understand what exercising, vesting, holding, or selling may mean for your overall tax position.
Stock Options + Exercise Planning
Evaluate the tax implications of Incentive Stock Options (ISOs) and Nonqualified StockOptions (NSOs), including exercise timing, holding periods, and potential tax exposure.
Restricted Stock + RSU Planning
Understand the tax impact of restricted stock and Restricted Stock Units (RSUs), including vesting, withholding, cost basis, and future sales.
Alternative Minimum Tax + ISO Planning
Model the potential Alternative Minimum Tax (AMT) impact of exercising ISOs and evaluate different exercise scenarios before you act.
Capital Gains + Sale Planning
Consider holding periods, cost basis, capital gains and losses, and the timing of stock sales as part of your broader tax strategy.
Concentrated Stock + Diversification Planning
Evaluate the tax consequences of selling or diversifying a significant company stock position while considering other income, investments, and financial goals.
Tax Projections + Estimated Payments
Model how vesting, exercises, stock sales, bonuses, and other income may affect your federal and state tax liability so you can prepare for estimated payments or adjust with holding.
Financial + Tax Advisor Coordination
Work along side your wealth advisor, financial planner, and other professionals to help keepyour equity, investment, and tax strategies aligned.
Frequently Asked Questions
How are RSUs taxed when they vest?
Restricted Stock Units (RSUs) are generally taxed as ordinary compensation income when they vest and the shares are delivered. The value is typically reported through payroll and included on Form W-2. B+Co can help project the additional income, evaluate with holding,and estimate federal and state tax exposure so you can plan before vesting creates an unexpected balance due.
What is the difference between ISOs and NSOs for tax purposes?
Incentive Stock Options (ISOs) and Nonqualified Stock Options (NSOs) have different tax treatment. Exercising NSOs generally creates ordinary compensation income based on the spread between the exercise price and fair market value, while exercising ISOs may trigger Alternative Minimum Tax (AMT). B+Co can model exercise and sale scenarios to help you understand the potential tax consequences before you act.
Can exercising incentive stock options trigger Alternative Minimum Tax?
Yes. Exercising ISOs and holding the shares can create an AMT adjustment based on thespread between the exercise price and the stock’s fair market value. B+Co can modelpotential AMT exposure, estimated tax requirements, and different exercise scenarios tohelp you determine how timing may affect your tax position
Should I exercise my stock options all at once or over several years?
Exercising options over multiple tax years may help manage taxable income, AMTexposure, cash requirements, and investment concentration, but the right strategy depends on your specific circumstances. B+Co can model different exercise quantities and timing scenarios so you can compare the potential federal and state tax consequences before exercising.
How are Employee Stock Purchase Plan (ESPP) shares taxed when I sell them?
ESPP taxation depends in part on how long you hold the shares after the purchase and offering dates. A sale may be treated as a qualifying or disqualifying disposition, affecting how much income is treated as ordinary compensation versus capital gain or loss. B+Co can help calculate the tax treatment and reconcile information from your Form W-2 and Form 1099-B to help prevent incorrect reporting.