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Hello,
Stocks I was granted when I was hired are coming up for expiry so it's time to think about exercising them, but I want to make sure I squeeze it for as much as I can. The first thing is I'm not willing to buy all the shares and hold onto them, I don't have the cash on hand to do that anyway and I'd rather not put all that much into one basket. So, I'm looking at two options:
Option 1:
Sell enough stock to cover the cost of exercising all the shares, keeping any that remain and holding onto them until next year.
Option 2:
Sell it all today.
For the first 5 years of my employment, I was granted 533 shares each year. All 2,666 shares are now fully vested. The grant price was about $7.16 and the current price is $11.50. I have confidence in the company but I don't expect the stock to soar, though I can see it rising maybe $0.50-$1.00 a year from now.
State income tax I believe is expected to go up 1% 1 year from now from 9.3% to 10.3%. I'm in the 28% federal income tax bracket.
My questions are:
Will I pay any tax if I go with option 1? If so, on what?
What will I pay tax on if I go with option 2, the full amount or just the gain?
Does the way the shares were granted (1/5th granted each year for 5 years) affect the taxes I will pay?
Thank you. :-)
Stocks I was granted when I was hired are coming up for expiry so it's time to think about exercising them, but I want to make sure I squeeze it for as much as I can. The first thing is I'm not willing to buy all the shares and hold onto them, I don't have the cash on hand to do that anyway and I'd rather not put all that much into one basket. So, I'm looking at two options:
Option 1:
Sell enough stock to cover the cost of exercising all the shares, keeping any that remain and holding onto them until next year.
Option 2:
Sell it all today.
For the first 5 years of my employment, I was granted 533 shares each year. All 2,666 shares are now fully vested. The grant price was about $7.16 and the current price is $11.50. I have confidence in the company but I don't expect the stock to soar, though I can see it rising maybe $0.50-$1.00 a year from now.
State income tax I believe is expected to go up 1% 1 year from now from 9.3% to 10.3%. I'm in the 28% federal income tax bracket.
My questions are:
Will I pay any tax if I go with option 1? If so, on what?
What will I pay tax on if I go with option 2, the full amount or just the gain?
Does the way the shares were granted (1/5th granted each year for 5 years) affect the taxes I will pay?
Thank you. :-)
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