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Strategy for Employee Stock Purchase Plans in 2012

Strategy for Employee Stock Purchase Plans in 2012

We recently explained that the Bush tax cuts will be ending at the end of this year. With the expiration of these rates approaching so quickly upon us, changes in future taxation has led us to urge those with employee stock purchase plans to take great care in creating a year-end strategy for moving forward in the New Year.

There are various aspects to take into consideration when planning for the future of your employee stock purchase plans. Please keep in mind, however, that an increase in tax rates should not be the only reason to plan for a sale of stocks. The following are a few of the factors to consider when devising strategy for your employee stock purchase plans:

Medicare Tax: In 2013, a 2.35% increase in the Medicare tax rate will occur for singles making over $200,000 or couples making $250,000 in annual income. If your compensation income could result in this increase, consider selling qualifying options in 2012 rather than 2013 as part of your year end strategy.

Share Purchase Periods: If a share has been purchased this year, it is important to monitor the stock price in relation to your purchase price. Your taxes will directly reflect the period in which you bought and sold the share. For individual questions on your employee stock purchase plans, always refer to your own specific documentation and seek professional advice.

Charitable Donations: Securities with low tax basis can be donated in lieu cash to charitable organizations if they have been held for over one year. These donations will result in a charitable tax deduction equal to the market value. Additionally, a strategy with charitable donations avoid capital gains taxation. Consider donating before the end of the year if the option presents itself.

These are only three of the common aspects to keep on your radar in relation to your employee stock purchase plans. At Stock Connections, we are prepared to help answer all of the questions you may have concerning your end of the year strategy. Come in and see us today!

Stock Connections specializes in working with San Francisco Bay Area companies that are involved in mergers & acquisitions, are raising capital, or creating stock option or other equity plans. We help start-up, private and public firms become – and remain – SEC-compliant. Stock Connections’ services are designed to help both start-ups and established firms comply with SEC and other regulations in their equity compensation programs. If you or anyone you know is looking to get involved with any of the above, we encourage you to contact us today!

 

 

 

 

 

 

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