Trying to find the best way to resolve tax problems can be a difficult process. Writing about the best practices to help taxpayers is also a unique challenge. When I started the project of writing a book on tax resolution planning I had a simple goal in mind. I wanted to present an overview of how to use the tax and financial process to deal with tax problems. However, I quickly noticed that very few tax and financial planning professionals actually provide comprehensive financial counseling and planning for a group of people that needs help the most. While exploring this …Read More
Financial planning is both an art and a science. Life planning is a relatively new approach that is usually seen as the art or human side of financial planning. The process of life planning is used to help people discover their deepest and most profound lifelong goals. This can be accomplished through a process of self-awareness and inquiry. If major obstacles such as significant tax debt or poor financial management exist it is difficult to focus on life and financial planning goals.
Tax problems create a need for tax and financial planning strategies that will solve tax issues the best …Read More
Do not feel overwhelmed if you owe back taxes to the Internal Revenue Service or a state taxing authority. The $300 billion plus federal tax gap is evidence that millions of people are experiencing tax problems. Do not expect tax problems to go away anytime soon. In 2009 our nation finds itself in the biggest economic crisis in modern history. Financial institutions are failing in record numbers. A credit crunch continues to loom, and the housing market continues to struggle amid global financial concerns. It is only natural that the tax gap will continue to increase as million of taxpayers …Read More
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 …Read More
There are a number of companies (mostly in high-tech) that reward their employees with a form of deferred compensation called incentive stock options (ISOs). The tax rules for these stock options are complicated, but if you receive this kind of benefit, you need to understand the basic rules for them to be able to use them effectively. For some time I’ve wanted to discuss how profits from stock purchased via ISO exercises are taxed. This post, which will be the first of two parts, is more of a primer than an exhaustive discussion, but I hope it will be useful.