Stock Options: Estate, Tax, and... | Buy

The success or failure of any family business depends in part on the industry-specific expertise of the owners and in part on the financial guidance of trusted professionals. Business owners seeking direction as well as financial professionals attempting to provide this guidance find themselves facing a daunting task. Financial issues that impact family businesses are quite diverse and require different strategies depending upon the stage of each business--start-up, operational, and exit.

Preface
Acknowledgments
About the Author
Why Stock Options?
Introduction
Evolution of Option Compensation
Comparing Options to Other Equity-Based Pay
Impact of Expensing on Stock Prices
Trends in Equity Compensation
Comparing Options
Tax Basics
Stock Option Terminology
Incentive Stock Options
Nonqualified or Nonstatutory Stock Options
Financing Techniques
Basis Tracking Worksheet
Sample Incentive Stock Option Agreement
Sample Nonqualified Stock Option Agreement
Form W-2 Showing Stock Option Income
FAS 123(R) Glossary
Alternative Minimum Tax (AMT)
Introduction
Calculating the AMT
AMT Adjustments, Preferences, and Conditions
Otto Optionnaire-Hold ISOs
Otto Optionnaire-Sell ISO Stock
Otto Optionnaire-Sell Stock at a Loss
Polly Plaintiff-Attorney Fees on Taxable Settlement
History of the Alternative Minimum Tax
Aggregate AMT Projections, 2006-2017
Individual AMT Preference Items
Alternative Minimum Tax by State
2006 Form 6251-Alternative Minimum Tax-Individuals
2006 Form 8801-Credit for Prior Year Minimum Tax
Coping with Tax Problems in a Down Market
Overview
Alternative Minimum Tax Problems Unique to ISOs
Break-Even Analysis for Nonqualified Stock Options
Installment Payment of Taxes
Offers in Compromise
Request for a (CDP) Hearing
Bankruptcy
Form 9465, Installment Agreement Request
Form 656, Offer in Compromise
Form 433-A Worksheet to Calculate an Offer Amount
Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals
Form 433-F, Collection Information Statement
Form 12153, Request for a Collection Due Process Hearing
Hold 'Em or Fold 'Em Break Even Analysis for NQs
IRS Historical Interest Rates on Late and Underpaid Taxes
Family Gifts of Stock Options
Overview
Factors Affecting Transferability
Nonvested Options as Completed Gifts
Valuation Issues
Gift Tax Return Disclosures
Income Consequences When the Donee Exercises
Gift Assignment Form
Black-Scholes Option Valuation Excel Template
Lattice Model Valuation Illustration
Sample Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return
Family Partnerships and Other Advanced Tax Planning Strategies
In General
Transferring Options to Family Partnerships
Donating Options to Charity
Sale of Options to a Related Party
Transferring Options to a GRAT
Options to Acquire a Partnership Interest
SEC Release 33-7646 (Short Form)
Form 8886
Stock Option Nominee Agreement
GRAT Illustration
Partnership Investment Company Flowchart
Checklist for Forming and Operating a Family Limited Partnership (FLP)
White House Press Release of Vice President Cheney's Gift of Stock Options
Divisions Pursuant to Divorce
Introduction
General Rule Under IRC Section 1041
Revenue Ruling 2002-22
Dividing Options as Marital Property
Options as Income for Child Support and Alimony
Tracing the Character of Stock Acquired by Exercise
Enforcing Agreements with Nontransferable Options
Divorce Trust Agreement
Bankruptcy of the Employee
In General
Application of Securities Laws in Bankruptcy
Income Tax Consequences
Pre-Petition Income or AMT Taxes
Legal Theories of Dividing Options in Bankruptcy
Filled-Out Form 982
Notice 2006-83-Individual Chapter 11 Debtors
Retirement Planning
Introduction
Pre-Retirement Planning
Retirement Year Decisions
Post-Retirement Year Considerations
2004 Stock Plan Design and Administration Survey, Accelerating Vesting on Termination Events
Exercise and Sell Every Year
Straddling Tax Years
Exercise as ISOs or Convert to NQs
Converting ISOs to NQs at Expiration
Coordinating ISOs, NQs and NUA
Gifting ISO Stock
Using the Refundable AMT Credit
Selling ISO Stock Wastes the Refundable Credit
Selling ISO Stock to Use Norrrefundable AMT Credits
Required Minimum Distributions and AMT Credits
Required Minimum Distributions, Uniform Lifetime Table
Model Rabbi Trust
Death of the Employee and Estate Administration
Introduction
Taking Inventory of the Options
Basis Step-Up and Holding Periods
Alternate Valuation Election
Carryover Basis After 2009
Alternative Minimum Tax Issues
Selecting a Tax Year for the Estate
Community Property Issues When the Employee's Spouse Dies
Specific Bequests of Stock Options
Estate Exercises the Options
Options in Pecunary Clauses
Options in Residual Bequests
Options in Fractional Bequests
Tax Liability on Options Gifted Before Death
Beneficiary Designation Form
Nominee Agreement for Nontransferable Options
Insiders and Other Highly Compensated Individuals
Introduction
$1 Million Limit on Deductible Compensation
Options as Golden Parachute Payments
Section 16 Reporting and Short-Swing Profits
Insider Trading Under Rule 10b5-1
Sarbanes-Oxley Act of 2002
Safe Harbor Black-Scholes Table (Rev. Proc. 2003-68)
Valuing Accelerated Vesting of Options as Golden Parachute Payments
Options Earned While Working Overseas
Introduction
Foreign Earned Income Exclusion
Foreign Tax Credit
Alternative Minimum Tax Foreign Tax Credit
Cross-Border Section 83(b) Elections
Section 83(b) Elections
Overview
The Basic Framework of Section 83
Definitions and Key Terms
Making the Election
Planning Opportunities with the Section 83(b) Election
Other Creative Uses of the Section 83(b) Election
Penalties for Noncompliance
Sample Section 83(b) Election
Form 8275, Disclosure Statement
State Income Taxation of Stock Options
Introduction
Conformity with the Federal System
Taxation of Residents
Change in Domicile or Residence
"Source Tax" on Nonresidents
State Taxation of Pension Income Act
State Income Taxation of Stock Options
Free Websites for State and Local Tax Information
Table of Authorities
Table of Cases
Index
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