NSO Tax Strategies

NSO Tax Strategies

• Exercise NSOs Earlier. Exercising NSOs sooner rather than later to shift taxation from (higher) income taxes to (lower) long-term capital gains tax rates.

• File an 83(b) election. File an 83(b) Election to shift taxes from income to capital gains.

• Pair NSO Exercises With ISO Exercises. Pairing NSO exercises with ISO exercises can help minimize (or eliminate) AMT tax exposure.

• Understanding/Correcting Cost Basis Post-IPO for NSOs. If you exercised NSOs pre-IPO and your company eventually IPOs, the cost basis your broker lists for your NSOs will very likely be wrong (and needs to be corrected on your taxes).

Cross-Listed Tax Strategies

In addition to the above NSO tax strategies, a number of other tax strategies may also apply in certain situations. We encourage you to review all of the strategies detailed on the 50+ Tax Strategies page to ensure you have the proverbial "full menu" of tax planning strategies to consider for your situation.