April 2009 | FIGuide

Incentive Stock Options (ISOs) and Income Taxes – Part Two

Apr 30 2009

For a refresher on incentive stock option terminology, please see the earlier post.

Let’s consider a case in which an ISO is exercised in one year and a disqualifying disposition is made in a different year:

On May 1, 2004, you received an ISO grant of 1000 shares with an exercise price of $10 and it vested immediately.

On January 1, 2005, you exercised the option and bought 1000 shares. The FMV of the stock that day was $35/share.

On January 3, 2006, you sold the stock for $45 per share.

In this case, you held the stock long enough …

Man vs. the Economy: A Survival Guide

Apr 30 2009

Early hints of spring have evolved into unmistakable signs of nicer days to come: flowers vigorously blooming, trees greening up, oriole sightings. But the forecast this week calls for an unappealing string of rainy days. And so it is with the state of the economy. Ups and downs. Hopeful signs and unexpected threats. (I’m looking at you, swine flu.) Mixed messages, at best.

Yes, our economic transition from cold, dark, dreary days to bright, sunny ones seems to be lagging Mother Nature’s seasonal shift a bit, and it’s clear that we’re “not out of the woods yet.” It’s enough to …

The Savings Paradox

Apr 29 2009

Let’s take a moment to review a theory proposed by John Maynard Keynes almost 100 years ago. Everyone would agree that it is beneficial for an individual to save money. However, what happens when a society saves too much? The savings paradox suggests that when society as a whole does not spend money less goods are consumed, leading to businesses being less profitable. Consequently, wages are lowered and jobs are lost, causing people to have less money and to be able to afford to save less. Thus, if an entire population saved more, our total savings rate would stay steady …

Acting during the Recession

Apr 28 2009

It’s abundantly clear that our economy is ailing. So everyone can sit around and whine about it, criticize the people who are working toward a improving the economy, or be part of the solution. Which action do you choose?

The media seems to be divided into two camps. Some journalists are part of the solution by keeping their audiences informed of opportunities in markets, government programs, and the private sector. Others seem to be finding satisfaction in preaching the end of the financial world to anyone who will listen. This latter group seems to have lost their Thesauruses. The least …

Trash is King

Apr 27 2009

Since the recent stock market rally began on March 9th, the S&P 500 is up 28%. Interestingly, the market sectors that were beaten down the most since the crash that began on October 9th, 2007, are the sectors that have performed the best during the current surge. Financial stocks, down about 70% during the market pullback, are now up 76% from their market lows. Industrials, which dropped 50% during the decline, are now up about 45% since the recovery.

It had been widely believed that the best place to be whenever stocks recovered would be high-quality companies with the resources …

Archive - April 2009