Nonqualified Stock Option


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Nonqualified Stock Option

Any employee stock option that does not meet with IRS requirements for preferential tax treatment.
References in periodicals archive ?
That will be exercise date for non-transferable and non-qualified stock options and grant date for transferable and nonqualified stock options.
As noted earlier, the typical nonqualified stock option is issued with a strike price equal to the market price.
While there are few differences for employees between nonemployer plans and traditional nonqualified stock option plans, there are significant cost, accounting and tax differences for an employer.
Traubenberg explained that some TEI members have reported significant late tax deposit penalties being raised in respect of employment and withholding taxes owed on the exercise of nonqualified stock options. The dispute is not whether the taxes are owed; rather, the issue is when the wages are actually or constructively paid.
On June 9, 2003, the Institute submitted the following comments to the Department of the Treasury and Internal Revenue Service requesting updated guidance on the rules governing employment and withholding tax deposits relating to the exercise of nonqualified stock options. The comments, which took the form of a letter from TEI President J.A.
Before the May ruling, the SEC insider rules applied for six months after exercise of a nonqualified stock option, and the tax imposed on the income from that exercise was deferred until the restriction lapsed.
409A purposes, although the proposed regulations provide a warning for plans that permit such options to be extended or otherwise modified in a manner that produces a nonqualified stock option (NQSO) as the successor.
Neither statute, however, specifies separate reporting of the spread between the nonqualified stock option price and its fair value." The organization urged that the announcement be withdrawn.
There is no tax consequence to either the employee or the company at the time of grant of a nonqualified stock option (NQSO), unless the option itself has an ascertainable fair market value (FMV), which usually means that it can be traded.
The spread between the option price and the fair market value of the employer-provided stock at the date of exercise of a nonqualified stock option constitutes wages.
421 will not apply to a disqualified disposition--treatment is similar to that of a nonqualified stock option (NQSO).
* In November 2000, the IRS issued Announcement 2000-97, modifying the manner in which the compensatory gain arising from the exercise of employer-provided stock options is to be reported by mandating the separate disclosure of nonqualified stock option income reported by use of code "V" on Form W-2.