Should I exercise my stock options or take the cash settlement for tax purposes?

Question

The company I work for has been purchased by an international company and the deal willl close in sept. I have unexercised iso stock options that are worth $180m. If I do not exercise them, I will be paid in cash when the merger closes in Sept. I will make about $200m in regular salary this year. I want to MINIMIZE the taxes I will pay on my iso's. Based on my salary, I know if I exercise the options I will have to report the value for AMT purposes. Would I be better off excercising the options (my old company stock would be converted to the new firms stock) and holding it for at least a year and dealing with AMT or just taking the cash and reporting it as regular income. Is their a tax advantage either way? Thanks

Answer 1

You make that much money and don't have tax accountants and financial advisers working for you? How come I make a lot less and I have a tax accountant and financial advisers to answer questions for me. In other words you make that much money, yet you don't know the answer to this question. Would it be best to say I don't believe you or just call you a liar?

Now I know there will be thumbs down for my answer to you as there are people who will believe ever thing you are saying to which can't be true.

Answer 2

You could exercise the options and hold the stock for a year to get the long term capital gain break. If the new firm is solid roll the old stock into the new. Or, you might split it up and do a half rollover and half exercise the option scenario. With the democrats and their tax and destroy deathwish the capital gain deferral may not be there much longer. They believe that if we send the money to washington they can spend it much more wisely than the low life taxpaying scum who sweat and toil to earn it in the first place.

Answer 3

First of all, I am assuming you are using "m" as an abreviation for thousand. If you are using it as an abbreviation for million you should already have a professional watching over your financial welfare.

In your situation I would start by reading the book "Consider Your Options" by Kaye Thomas.

http://www.fairmark.com/books/consider.htm

You can post any questions you have from the book on the message board at fairmark

http://www.fairmark.com/

and likely get an answer from Kaye Thomas himself. As a tax lawyer who has studied employee compensation in stock and options you are almost sure to get better information from him than anyone responding to your question on Yahoo Answers.

Answer 4

If you are making $200,000,000, it makes little difference. In either case, you will pay taxes at the HIGHEST federal income tax rate. ATM at that level essentially replaces ALL itemized deductions with the equivalent of the standard.

Answer 5

You don't own all those stock options. If you did, your broker that your company uses would help you make the best decision.

Answer 6

You obviously don't make as much as you say if you have to come here to ask the question.

Answer 7

no clue, but can i marry you, ive never heard of someone being so successful!