If I exercise stock options that I have had for over a year and sell them right away is the gain a LT cap gain

Question

Any details you can add to let me know how to report this on my taxes would be most appreciated. Obviously, this is the first time I'm dealing with this.

Answer 1

If you are talking about employee stock options, then if you exercise and sell immediately, the difference between the option price and the fair market value of the shares is taxed as ordinary income. Only the difference between the fair value and your sales price will be treated as a gain or loss, and that would be short term.

If you bought the options on an exchange, you can sell them on the exchange and achieve long-term capital gain treatment. However, if you exercise then, you'll have to wait for a year to sell the stock and get long-term gain treatment.

Answer 2

If you didn't own the actual stock for over a year, then it's short term.