TCP: T1M1

grant date

when the employee receives the award

vesting date

when the employee has the right to exercise the equity award

exercise date

when the employee purchases stock using stock options or cashes out SARS

sale date

when the employee sells restricted stock or stock acquired using stock options

expiration date

when the rights under the equity award lase, or expire, unused

nonstatutory & statutory

what are the two types of employee stock options

incentive stock options & employee stock purchase plans

what are the two types of statutory stock options

when granted if there is a readily determinable value

when is a nonstatutory option taxed

when exercised

when is a non-statutory option taxed if there is not a determinable value at the time of the grant

transferable, exercisable immediately, no restrictions, fair value can be determined

if an option isn’t traded on a market what four things need to be present for it to have a readily determinable value

exercise price plus any amount previously taxed

what is the basis of the stock that had a readily determinable value

fmv - cost

what is the amount of ordinary compensation taxed when we have an NSO with a readily determinable value

bargain element: FMV - exercise price

what is the amount taxed if we have an NSO with no readily determinable value

FMV on exercise date

what is the basis of the stock if is is an NSO with no readily determinable value

capital loss equal to price

if the option lapses what can the employee deduct if they paid something

holding period

how long you must hold the stock for favorable tax treatment

vesting period

when you earn the right to exercise the option in the stock

SWEET

what is the acronym for the similarities between ISOs and ESPPs

statutory stock options, written and approved by SH, enhanced tax advantages, employee remains at corp from grant date to exercise date (3 months), timing requirement: 2 years after grant date and 1 year after exercise date

what are the 5 similarities between ISOs and ESPPs

PELPTT

what is the acronym for the differences between an ISO and ESPP

Purpose, eligibility, limitations, price limit, transaction limit, time limit

what are the six differences between ISOs and ESPPs (generally)

incentivize select employees, discretionary, <= 10% vote and value, no discount, <=$100,000 per year, exercised <= 10 years of the grant date

what are the six differences pertaining to an ISO

allows most employees, nondiscriminatory, < 5% voting power, 15% max discount, <=$25,000 per year, exercised <= 27 months of the grant date

what are the six differences pertaining to an ESPP

exercise price plus any amount paid

what is the basis for a statutory stock option

capital

if the 2/1 rule is met what is gain or loss on a subsequent sale of stock considered

ordinary on fmv - option price then capital

if the 2/1 rule is not met what is the gain or loss on a subsequent sale of stock considered

oi on the vesting date

what and when is it recognized with restricted stock

vesting date

when does the employee’s holding period begin with restricted stock

83b

an employee may elect to recognize ordinary compensation income for the FMV of the stock on the grant date if what election is made

Restricted stock units

not actual shares of employer stock; but rather a promise to give an employee a specified number of unrestricted shares of employer stock on the vesting date

oi on the vesting date

with RSUs when and what type of income is recognized

Stock appreciation rights

the employee receives a payment equal to the difference between the FMV of the stock on the exercise date and the FMV on the date the option was granted

oi for the cash payment

what type of income is recognized with a SAR

$10,000

what is the de minimis exemption for imputed interest loans for gift loans or employer/employee

bona fide residence test

the taxpayer must have been a bona fide resident of a foreign country, or countries, for an uninterupted period that includes the entire taxable year

physical presence test

taxpayer is physically present in a foreign country, or countries, for 330 full days during any 12-consecutive month period, although the 330 days do not need to be consecutive

$132,900

what is the amount of the foreign earned income exclusion

PANIC

what is the acronym for the adjustments made to calculate AMT

passive activity losses add back, accelerated depreciation (not 179), net operating loss recompute, instalment method no, contracts - long term must use percent completion

what are the five main amt adjustments

itemized deduction taxes and all standard deduction

what are the two additional things that would get added back to calculate AMT

private activity bond tax exempt interest, percentage depletion deduction, pre-1987 accelerated depreciation

what are the three tax preference items