Equity compensation mechanics
Incentive stock options (ISOs) and non-qualified stock options (NSOs) have different tax treatment at grant, exercise, and sale. RSUs are taxed as ordinary income at vest. Understanding which type you have and when to exercise is often a six-figure decision.
AMT planning
Exercising ISOs without a same-year sale can create substantial Alternative Minimum Tax liability. Planning the exercise across multiple years, or pairing with a same-year sale, can avoid the AMT drag.
Deferred compensation and 83(b) elections
Section 409A deferred compensation plans, 83(b) elections on restricted stock, and qualified small business stock (QSBS) under Section 1202 all have strict timing rules and large payoffs when handled correctly.
Multi-state residency
Executives who move mid-year, work remotely across state lines, or retire to a low-tax state face residency sourcing questions on equity comp that vested across states. We file part-year and non-resident returns in every affected state.
Common questions
- Should I exercise my ISOs now or wait?
- Depends on spread to current FMV, AMT exposure, your liquidity, and your confidence in the company. We model both paths specifically.
- How does a move from California to Florida affect my RSUs?
- California will source the portion of RSU income earned while you worked there, even if vested after the move. We apportion across states.