Employee Stock Options

• § 11.01 Overview of Taxation of Employee Stock Rights
• —–[1] Statutory Stock Options
• —–[2] Incentive Stock Options (ISOs)
• —–[3] Stock Options Under Employee Stock Purchase Plans (ESPPs)
• —–[4] Conditions on Favorable Treatment of Statutory Stock Options
• —–[5] Nonqualifying Transfers or Dispositions of Statutory Stock
• —–[6] Statutory Options and Stock After Death of Participant
• —–[7] Transfers of Statutory Options or Stock Incident to Divorce
• —–[8] Incentive Stock Price Paid with Previously-Acquired Employer Stock
• —–[9] Alternative Minimum Tax (AMT) Treatment of ISOs
• —-[10] No Withholding on Statutory Stock Options or Statutory Stock
• —-[11] Stock Received upon Exercise of a Nonstatutory Stock Option
• —-[12] Election for Unvested Stock Received upon Exercise of a Nonstatutory Stock Option
• —-[13] Treatment of Forfeitures of Nonstatutory Stock
• —-[14] Taxation of Stock Appreciation Rights (SARs or Phantom Stock)
• —-[15] Qualified Stock Derived from Qualified Equity Grants

• § 11.02 Statutory Employee Stock Options
• —–[1] Statutory Employee Stock Options Generally
• —–[2] Employee Incentive Stock Options (ISOs)
• ———-[a] Definition of Incentive Stock Options (ISOs)
• ———-[b] Treatment of Qualifying ISO Exercises and Stock Dispositions
• ———-[c] Treatment of Nonqualifying ISO Exercises or Stock Dispositions
• ———-[d] Treatment of ISOs and Incentive Stock after Participant’s Death
• ———-[e] Option Price Paid with Previously-Acquired Stock of the Employer
• ———-[f] Unfavorable Alternative Minimum Tax (AMT) Treatment of ISOs
• ———-[g] Transfers of ISOs or Incentive Stock Incident to Divorce
• —–[3] Employee Stock Purchase Plan Options (ESPP Options)
• ———-[a] Definition of an Employee  Stock Purchase Plan (ESPP)
• ———-[b] Treatment of Qualifying ESPP Option Exercises and Stock Dispositions
• —————[i] Conditions on Favorable Tax Treatment of ESPP Options and Stock
• —————[ii] Favorable Treatment Given ESPP Options and Stock
• ———-[c] Treatment of Nonqualifying ESPP Option Exercises or Stock Dispositions
• ———-[d] Treatment of ESPP Options and Stock after Participant’s Death
• ———-[e] Transfers of ESPP Options or Stock Incident to Divorce
• —–[4] No Tax Withholding on Statutory Stock Options or Statutory Stock

• § 11.03 Nonstatutory Employee Stock Rights
• —–[1] Nonstatutory Employee Stock Rights Generally
• —–[2] Nonstatutory Employee Stock Options
• ———-[a] Nonstatutory Stock Option with Readily Ascertainable Fair Market Value
• ———-[b] Nonstatutory Stock Option Without a Readily Ascertainable Fair Market Value
• —————[i] Income Recognition on Sale/Exercise of the Option or Vesting of the Stock
• ——————–[A] Income Recognition on Sale, Exercise, or Vesting Generally
• ——————–[B] The Election to Report Income on Receipt of Unvested Stock
• ——————–[C] The Meaning of Substantial Risk of Forfeiture
• ——————–[D] Examples: Income on Option Exercise or Vesting/Sale of Stock
• ——————–[E] Underwriters’ IPO Commissions Not Deductible from Option Income
• —————[ii] Option Price Paid with Previously Acquired Stock of the Employer
• —————[iii] Taxation of Dividends on Nonstatutory Stock
• —————[iv] Treatment of Forfeitures of Nonstatutory Stock
• —————[v] Taxation of Proceeds from the Sale of Nonstatutory Stock
• —————[vi] Gift of Unvested Nonstatutory Stock
• —————[vii] Transfers of Nonstatutory Options or Stock Incident to Divorce
• —————[viii] Death of Participant Before Vesting of Nonstatutory Stock
• —————[ix] Tax Withholding on Exercise of Nonstatutory Stock Options
• —–[3] Hypothetical Stock Ownership Rights
• —–[4] Avoiding 409A Penalties and Interest Under a Nonstatutory Stock Rights Plan

• § 11.04 Qualified Equity Grants
• —–[1] Qualified Equity Grants Generally
• —–[2] Only an Eligible Corporation May Issue Qualified Equity Grants
• —–[3] Only a Qualified Employee May Receive Qualified Stock
• —–[4] Stock Issued Must Meet the Requirements for Qualified Stock
• —–[5] Timing of the Election and Limitations Imposed
• —–[6] Qualified Stock That Is Not Part of the Qualifying Equity Grant Plan
• —–[7] Applicability of Section 409A Unchanged by a Deferral Election for Qualified Stock
• —–[8] When the Deferral Election for Qualified Stock is Beneficial
• —–[9] An Employer May Opt Out of the Qualified Equity Grant Provisions

• § 11.05 Stock Options Treated as Golden Parachute Payments

• § 11.06 Qualified Small Business Stock Acquired from Employer
• —–[1] Exclusion of Gain on Qualified Small Business Stock (QSB Stock)
• —–[2] Requirements for Qualification as QSB Stock
• —–[3] Tax-Free Rollover of Proceeds from Sale of QSB Stock

• § 11.07 Uncertain Applicability of the Tax on Net Investment Income

» Chapter 12 – RETIRING PARTNERS AND SOLE PROPRIETORS