
Create a plan for stock at work review
Lesson in Course: Ambition reviews (beginner, 5min)
Part 3 of Use stock at work
Exercising our right to buy shares
If we are planning to sell our shares, we must first exercise our options. However, exercising our stock options can be risky.
Exercising early
Early exercising means that we execute our right to purchase stock in the company even before we own them. To early exercise, we need to file an 83(b) election with the IRS.
NSO exercise and sales tax
When we exercise our NSOs, it will look like we made income to the IRS regardless of whether we can sell the shares for cash.
ISO exercise and sales tax
ISOs have tax incentives baked in; however, they also have requirements for their tax advantages. If we meet these requirements, our equity is considered a qualified disposition. Failing to meet the requirements results in a disqualification for the incentives.