Stock options

[k3am]

I’m out of my depth here.

I have stock options in my company. They’re fully vested, stock value is up. There is a quarterly dividend that’s historically paid about 5% per annum of what the my options are currently valued at.

From what I understand, the long term goal is to be sold, but in the interim, we’re busy buying other companies and working on growth.

We have the cash to exercise the options. They’d make up about 15% of our investments if we did.

Is there any rule of thumb for determining whether to exercise or defer? And if we exercise, do we hold or sell after a year?

[oswin]

Read this blog post: flowfp.com/what-should-i-do-with-my-stock-options/ You have lots of options on what to do with your options. Depending on the fine print (some of this is mentioned in that blog post), there are different tax implications to purchasing. Once upon a time I had ISO that were worth something. I exercised them, and I ended up owing AMT that year (luckily the next year I did not and actually got most of that AMT back).

Also, be very very careful doing your taxes any time you do anything with stock options. I tried to use turbo tax that year I had options and it was not doing it correctly. I ended up just doing it all myself, because by reading all of the forms and the instructions I knew I had it right. Or maybe hire an accountant to do your taxes.

[k3am]

oswin, thanks. We haven't prepared our own taxes in quite a while and rely on a tax accountant. I don't have the patience to do it myself and I don't trust DH's ability to pay attention to (any) details.

[oswin]

Jul 26, 2019 11:54:28 GMT -5 k3am said:

oswin , thanks. We haven't prepared our own taxes in quite a while and rely on a tax accountant. I don't have the patience to do it myself and I don't trust DH's ability to pay attention to (any) details.

Yep, so then I'd find the relevant fine print on your options and ask for advice from your accountant about how exercising them will affect your taxes.