TAILIEUCHUNG - Taxation of stock options and restricted stock: the basics and beyond

Given these changes, it would be relevant to examine the present shareholding pattern of listed companies. The crux of the issue is: who own corporate India? What is the extent of shareholding of individual Indian investors who actually represent the disintermediation phenomenon? What is the extent of foreign portfolio investments which are a major focus of policy towards stock market? How relevant are the ceilings placed on FII investments and how widespread are these investments? How much inroads mutual funds could make? Preliminary results of an ongoing study at the. | Grant Thornton Taxation of stock options and restricted stock the basics and beyond by G. Edgar Adkins Jr. Taxation of stock options and restricted stock the basics and beyond 1 Contents Page Introduction 2 Incentive stock options 3 Nonqualified stock options 8 Restricted stock 10 Income tax withholding and employment taxes on stock options and restricted stock 15 Conclusion 16 This document supports Grant Thornton LLP s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the subject of this document we encourage you to contact us or an independent tax advisor to discuss the potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this document may be considered to contain written tax advice any written advice contained in forwarded with or attached to this document is not intended by Grant Thornton to be used and cannot be used by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code. Grant Thornton LLP. All rights reserved. Taxation of stock options and restricted stock the basics and beyond 2 Introduction The compensation mantra for many companies today is pay for performance. As a result companies often focus on equity-based compensation in order to align the interests of executives with those of the company s shareholders. The most popular forms of equity-based compensation are stock options and restricted stock. It is not uncommon for these vehicles to compose a substantial portion of an executive s net worth. Accordingly it is important that executives fully understand the income tax treatment of options and restricted stock in order to maximize the after-tax value. This article presents the basic tax rules that apply to stock options and .

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