imadthegreat
Feb 3, 2014, 11:16 PM
Hi
Last year I exercised company stock options. A month later my company was sold so all my shares were sold. Assume that my exercise price was "X" and my selling price was "Y". If I was paid out my profits like in simple "Y-X" then I would have just reported that easily. However, some amount out of Y was held in an indemnification escrow fund and will be released in 01/2015. Assume that amount is Z. So what I really received is Y - Z. My question is what sale price and hence profit should I be reporting. Is it Y-Z-X as that is the amount I received or just Y-X.
Y-X should make my calculations easy but will increase my tax bill as its all going to be short term gain. And I am also earning some interest on that escrow fund on which I will have to pay taxes later. I am a little confused on what's the right/best approach is to handle this.
Thanks
Imad
Last year I exercised company stock options. A month later my company was sold so all my shares were sold. Assume that my exercise price was "X" and my selling price was "Y". If I was paid out my profits like in simple "Y-X" then I would have just reported that easily. However, some amount out of Y was held in an indemnification escrow fund and will be released in 01/2015. Assume that amount is Z. So what I really received is Y - Z. My question is what sale price and hence profit should I be reporting. Is it Y-Z-X as that is the amount I received or just Y-X.
Y-X should make my calculations easy but will increase my tax bill as its all going to be short term gain. And I am also earning some interest on that escrow fund on which I will have to pay taxes later. I am a little confused on what's the right/best approach is to handle this.
Thanks
Imad