Strategically Exercise Your Stock Options

The turmoil created by the Enron debacle has refocused attention on stock options. If you haven't thought about stock options you hold, it's time you do.

Incentive stock options are usually granted when an employer anticipates appreciation in its market value. By holding the stock for the appropriate period, you can take advantage of long-term capital-gain rates, which are lower than the tax you would pay if you sold the stock right after you acquired it.

Careful planning is required when exercising stock shares, since the options are subject to an alternative minimum tax computation, which can be a major profit retardant.

You can maximize your cash flow by staggering your stock purchases in light of the alternative minimum tax associated with the exercise of incentive stock ptions.

Bottom line: The tax savings and impact on cash flow are substantial. Let Stafford & Paulsworth help you get the most out of your incentive stock option portflio by identifying the optimal period to exercise and sell options.


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