Tax on Stock Compensation

In general, investors purchase when they want to take part in the financial performance of a company.  This type of stock purchase is a type of investment property and receives special tax treatment. This tax treatment is “capital gains tax treatment”. The capital gains tax rate depends on whether the property is held on a short-term or long-term basis. Individuals also obtain stock for other reasons, though.  For instance, it can also be a form of compensation. This blog will examine this alternative stock acquisition strategy.  In it, we’ll discuss the tax implications of receiving stock in lieu of pay and how to handle such stock. Sometimes stock is a means to retain talented employees. In other cases, stock may be a short-term cash preservation strategy. This latter strategy is a typical tactic by companies dealing with liquidity issues. Companies also offer stock options to employees. Stock options give…

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