Prague & Company, P.C. has extensive expertise in the areas of non-cash compensation.  Specifically, the tax ramifications to employees, consultants, investors, and shareholders of the various types of compensation and equity ownership they may receive.

The tax laws related to the receipt and exercise of stock option grants and restricted grants are complex, and not understanding the results of particular actions could lead to costly tax results for you either currently or in the future.

We provide tax advice and consultation concerning:

• Non-Qualified Stock Options (NSOs)
• Incentive Stock Options (ISOs)
• Restricted Stock Grants
• Section 83(b) Elections
• Golden Parachutes

We also have experience with the Alternative Minimum Tax (AMT) and how it is affected by your exercise of ISOs or other transactions.  For many of our clients, we deal with the complex calculations relating to the "unwinding" of the AMT credit in the current year from AMT paid in prior years.  Recent changes in tax law may afford clients who have long-term AMT credits carried forward from prior years to realize substantial refunds, beginning in 2007.

We can answer questions such as:

• How can I ensure that I will get capital gain treatment on the eventual sale of my restricted shares?  What happens if I don't do anything?

• I exercised some ISOs earlier in the year.  Now the stock has fallen in value.  Should I dispose of the shares before year-end in order to avoid the AMT hit?  Or does the ordinary income tax on the disposal exceed the potential AMT?

• How does the exercise of my NSOs affect the calculation of my estimated tax payments?  I think some amount of taxes was withheld, but was it the right amount?

• My company was recently purchased and all of my shares vested immediately.  What sort of tax liability do I have on this transaction?  When are the taxes due?

• I have shares which I purchased through the exercise of ISOs and NSOs, as well as some I purchased on the open market.  I need to raise substantial funds in the next couple of weeks.  Which shares should I sell in order to minimize my tax liabilities?

• I exercised some ISOs earlier this year and the stock has since rocketed up in value.  If I sell the shares now, will my gain be all ordinary, all capital, or something in between?  What if I wait until I've held the stock for a year?  If I do so, will I get back the AMT amount I pay this year?

Please contact us to discuss how NSOs, ISOs, Restricted Stock, §83(b) elections, and other types of deferred compensation may affect your individual tax picture.

**The material contained on this web site is provided for information purposes only and is not intended to constitute legal or tax advice. The quality, timeliness, accuracy or completeness of any information at this web site, as well as its operation, is provided as is without representation, warranty or condition of any kind. All liability in respect of such information is disclaimed. Do not rely upon the information or apply it to your situation without first consulting Prague & Company, P.C. or other qualified professionals. Any reference or link to a third party is not an express or implied endorsement by Prague & Company, P.C. and Prague & Company, P.C. is not responsible for the materials on such linked third party web sites.