CFP

Stock Plans - Introduction

Variants on equity based compensation, stock plans entail the grant of shares (or some accounting measure thereof) of a publicly traded company's stock rather than an option to acquire them. A separate section in our guide takes a look at incentive stock options (ISOs) and non-qualified stock options (NQSOs).

Because these are all a type of non-qualified plan, any realized gains are included in gross income only when the recipient has unfettered access to the shares or units (e.g. substantial risk of forfeiture no longer exists as the shares have been constructively received). This section discusses the basic types of arrangements, including: restricted stock, phantom stock, stock appreciation rights (SARs) and employee stock purchase plans (ESPP). Tax treatment and application of such plans are considered as well.





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