Taxation of Stock Options and Restricted Stock: Basics and Beyond

The most popular forms of equity-based compensation are stock options and restricted stock. It is not uncommon for these vehicles to compose a substantial portion of an executive’s net worth. Accordingly, it is important that executives fully understand the income tax treatment of options and restricted stock in order to maximize the after-tax value. This article by Grant Thornton presents the basic tax rules that apply to stock options and restricted stock, but also goes beyond the basics to discuss several more complex issues and tax planning considerations.