Does anyone know the tax implications of being granted stock options in CA state?

Question

I am going to be granted options in a startup, and would like to understand the tax implications. Thanks!

Answer 1

Incentive stock options are not subject to regular income tax on exercise, but do give rise to an item of tax preference. On the sale of the stock at least one year after exercise and two years after receipt of the option, and satisfaction of a bunch of other requirements, you would have capital gain for federal income tax purposes. With non-qualified options, you will have income on the exercise of the options. California follows federal definitions and timing but offers no capital gain preference. You mentioned that the granting company is a start up, so exercising the options right away probably means no income on exercise and capital gains on sale if you hold for a year.

Answer 2

Stock options are a complex issue. There are a number of types of stock options most of which are only taxable when you exercise the option. It would be worth your while to get the information from the company and take that to a tax professional that is familiar with option taxation.

Answer 3

Generally, for federal, stock options only become taxable when you exercise them. I don't know about the rules for state tax in California.

Answer 4

on your time table D, report a loss. now you won't be able to purchase back the inventory until after a undeniable volume of time. So in case you circulate out and in of the comparable inventory and lose money, you may no longer have the skill to declare a loss.