I want to exercise employee options and then transfer them to my nephew. My nephew will be purchasing them. Since the transfer of funds has to go through me as the employee. What are the tax implications for me and my nephew?

ANSWER

Expert William Richmond's Answer:

I assume you are referring to the potential transferability of the options themselves and not to the stock acquired via the exercise of the options. One would not wish to exercise the options if one wished to transfer them at some point--usually via will at death. Assuming that is the case, transferability is usually limited and depends on the type of stock option (incentive stock option or non-incentive stock option) and further described in any option agreement you have been given by your employer. It is quite difficult to opine on the tax implications or even the permissibility of transferring stock options without a thorough knowledge of the details listed above.

William Richmond, CPA

Tennessee

35 yrs experience

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