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Where Taxpayers and Advisers Meet

Bed and Breakfast when I exercise options

kwiji
Posts:2
Joined:Sat Jan 25, 2020 5:35 pm
Bed and Breakfast when I exercise options

Postby kwiji » Mon Dec 14, 2020 7:19 pm

Just checking will a Sell and then a purchase of vested stock options incur the Bed and Breakfast rule..

Example:
Join a company (US COmpany I'm UK based) 4 Years company NSO Stock options 25% vest each year over 4 years. RIght to purchase at $1 (4000 shares)

So 4000 shares, 1000 vesting each year over 4 years.
I purchase 1000 shares end of my first year fair market values is $1.
Second year the shares are now worth $10, I sell the 1000 (For $10000 making $9000 profit) however I purchase my newly vested shares all 1000 (for $1 each paying tax on the 9000 amount of fair market value same day I sold them).

So in the end I'm left with 1000 shares and $10,000 in my account (With 2000 still to vest).. Am i right that I don't have to pay the Capital gains on the $9000 profit until I ultimately sell the next 1000 because I purchased my additional vested options within the 30 day window thus my Capital gains on the original sale weren't crystallized?

Return to “Capital Gains Tax, CGT”