Challenge

Do you have Incentive Stock Options (ISOs)?

If so, you know how complicated it can be to determine what to do with them. There can be tax benefits if you follow certain rules laid out by the IRS. How should you unlock the value and make sure you don’t pay more in taxes than you need to? Plus, where will the cash come from to pay the taxes when they’re due?

Solutions

You can exercise some or all of your ISOs to turn them into company stock.

Pros: You might be able to lower your taxes if you hold the stock over one year and participate in the potential upside of the stock

Cons: Your stock might fall in value and you might not have the cash you need to pay taxes when they’re due

You can exercise some or all of your ISOs to turn them into cash.

Pros: Whatever amount of ISOs you turn to cash will no longer move down if the stock price falls in the future. You can then use the cash to pay taxes, pay off debt or make new investments.

Cons: Whatever amount of ISOs you turn to cash will no longer move up if the stock price rises in the future. Plus, you might pay a higher tax rate on your ISO capital gains.

You can hold all your ISOs and do nothing.

Pros: You don’t have to spend any time making complicated decisions about how much of your ISOs to exercise-and-hold or exercise-and-sell.

Cons: When your ISOs expire or you leave your company, any value they may have will disappear.

Next Steps

We’ve helped clients who face choices just like these with their ISOs. We’ll collaborate with you so you can determine the pros and cons of your individual situation. Through conversation and planning, we can run “what if” scenarios tailored to your concerns and goals to show you a range of possible paths to consider. We’ll continue to update your plan through ongoing communication so it stays current as you change and the world changes.

Schedule a Free Analysis

Meet with one of our experts to discuss your options.

Please note: The above case study is hypothetical – it does not involve an actual client. Case studies are intended to illustrate the hypothetical experience of a fictitious client based on a scenario that an actual client might experience. Case studies are designed to illustrate how we may provide investment advisory services through Mariner Platform Solutions (MPS) to our clients. Remember that no two clients, situations, or experiences are exactly alike. Case studies are not to be construed as an endorsement or testimonial of any of its past or current clients, nor any assurance that we may be able to help any client achieve the same results. To the contrary, no case study should be construed by a client or prospective client as a guarantee that they will experience a certain level of results or satisfaction if engaged in investment advisory services available through MPS.