disqualifying disposition

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Disqualifying Disposition

A sale or other transaction in stock that one acquired to an employee stock option plan within two years of enrollment in the plan or one year of purchase. The profit on a disqualifying disposition is not considered capital gains and is taxed like ordinary income, which is usually at a higher rate.

disqualifying disposition

The sale, gift, or exchange of stock acquired through an employee stock purchase plan within two years of enrollment or one year of the purchase date. A disqualifying disposition results in ordinary income for tax purposes.
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According to Denise Vitale, Vice President of Product Development, "This allows for better tracking of disqualifying dispositions that require W2 reporting of the ordinary income and have an associated compensation expense tax deduction for the company.
As many option holders often exercise an option and sell the stock for cash the same day, disqualifying dispositions are very common.
In addition, there will be no income tax withholding on such disqualifying dispositions or on gains from exercising ESPP options with an exercise price between 85 percent and 100 percent of fair market value.
3% tax rate in its first quarter, slightly lower than expected primarily due to the impact of disqualifying dispositions of incentive stock options exercised during the quarter.
Federal income tax withholding would not be required on disqualifying dispositions or when compensation is recognized in connection with an employee stock purchase plan discount.
The IRS will scrutinize such compensation to ensure proper income recognition on vesting and on disqualifying dispositions.
2 million relating to disqualifying dispositions of incentive stock options.
421(b) for disqualifying dispositions of incentive stock options (ISOs).
more than one-third, consider disqualifying dispositions prior to the tax year-end.
The cash flow presentation for both 2005 and 2004 have been adjusted to move the Tax Benefit of disqualifying dispositions of stock options and exercise of non- qualified stock options to the Financing Activities section of the cash flow statement from the Operating Activities in accordance with FAS 123R guidance.
71-52, but until it changed that ruling, it was extending payroll and withholding exemptions to ISOs and disqualifying dispositions of statutory option stocks.
The provision for income taxes in this year's first quarter was reduced by $49 million related to ISO disqualifying dispositions.