Stock Option Planning

Tax-efficient planning for equity compensation, stock options, and restricted stock.

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Equity compensation can represent a significant portion of your total wealth and involve some of the most consequential tax decisions you’ll make. The tax treatment of incentive stock options, nonqualified stock options, and restricted stock units varies considerably, and the timing of when you exercise, sell, or hold shares can have a lasting impact on what you keep.

Without a clear strategy, equity compensation can generate unexpected tax bills and financial challenges:

  • Alternative minimum tax exposure from exercising incentive stock options
  • Ordinary income and withholding obligations from exercising nonqualified stock options
  • Taxable income triggered when restricted stock units vest
  • Estimated tax or cash-flow issues when withholding does not cover the full liability
  • Concentrated stock positions that can be difficult to diversify or unwind efficiently

BPM’s stock option planning services help executives and founders understand their equity compensation, evaluate the tax impact of different decisions, plan around important exercise and vesting windows, and align those decisions with their broader financial goals.

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Making the Most of Your Equity Compensation 

The decisions that most affect your outcome with equity compensation tend to happen before a transaction, not after. We work with clients on exercise timing strategies for ISOs and NSOs, AMT planning and mitigation, holding period analysis to optimize for long-term capital gains treatment, and planning around liquidity events, including when your company goes public, is acquired, or runs a tender offer. 

For clients with RSUs, we address vesting schedules, withholding strategies, and the interplay between equity income and overall tax liability for the year. Where equity is part of a deferred compensation arrangement, we advise on the applicable tax rules to help you avoid costly penalties. 

Coordinating Equity Planning with Your Full Financial Picture 

Stock option planning works best when it connects to the rest of your financial life. We coordinate equity compensation strategies with your income tax planning, estate planning, and charitable giving goals, so a decision about when to exercise options doesn’t create unintended consequences elsewhere.

For clients approaching a significant liquidity event, we can also help evaluate strategies for managing concentration risk in a tax-efficient way. Equity compensation decisions often have a short planning window. 

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Looking for a team who understands where you’re headed and how to help you get there? Whether you’re building something new, managing growth or preserving success, let’s talk.