Employer Stock Plans
Chapters in this video
- 0:00 Grant, exercise, sale: the timeline that matters
- 1:52 Norm's NQSO and the employer deduction trap
- 3:26 Isabella's ISO and the AMT gotcha
- 5:01 Disqualifying dispositions and the 2-and-1 holding rule
- 6:01 ISO vs NQSO side-by-side
- 6:46 Penny's ESPP, the 15% discount, and the lookback
- 8:16 Rapid-fire exam recap
What this video covers
- The three-step timeline that drives every option question: grant date, exercise date, and sale date
- Why non-qualified stock options (NQSOs) trigger ordinary income on the spread at exercise, and why the employer gets a matching corporate tax deduction
- Why incentive stock options (ISOs) avoid regular income tax at exercise but create an alternative minimum tax (AMT) preference item
- The ISO holding period rules (2 years from grant AND 1 year from exercise) and what a disqualifying disposition does to the tax treatment
- Who can receive each option type: ISOs are employees only, NQSOs can go to anyone including consultants and outside directors
- How employee stock purchase plans (ESPPs) work, including the 15% maximum discount, the lookback provision, and broad employee eligibility
- Why the ESPP discount is NOT taxed at purchase, and how that mirrors the deferred-taxation concept from ISOs
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