Stock options can furnish tax benefits even in corporate takeovers, but timing is crucial

Article Abstract:

Incentive stock options (ISOs) are not currently taxed if the options meet certain criteria. Employees do not recognize income at the time of exercising an ISO and employers do not deduct the amount attributed to the grant of an ISO at that time. Nonqualifying stock options (NQSOs) are subject to restrictions affecting their value and generally are not taxable until they are substantially vested. The employer deducts the amount the employee recognizes in income. Employees recognize income when: the property is transferred in connection with services; the employee elects current income recognition; or restrictions are cancelled. In the area of mergers and acquisitions, transfers of ISOs and NQSOs can result in deductions to an acquired corporation or an acquiring corporation that cancels the options. To sustain deductions, arrangements must be in place before the acquisition.

Methods, Acquisitions and mergers, Tax accounting, Stock options, Employee benefits, Incentive stock options

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Maximizing tax benefits of medical expenses

Article Abstract:

Internal Revenue Code Section 213 stipulates that medical expenses that exceed 7.5% of a taxpayer's adjusted gross income are deductible from income tax. However, tax deductions for medical expenses are available only if the taxpayer itemizes deductions on Form 1040 Schedule A. Taxpayers must pay careful attention to the timing of their medical expenses payment and to deferrals or accelerations of elective treatment in order to maximize the tax benefits. Deductions for medical expenses are limited to those expenses incurred for the alleviation or prevention of illness or physical or mental defects and include diagnosis, treatment, or prevention of disease, transportation costs to receive treatment, and insurance premia covering the expenses of medical care.

Analysis, Laws, regulations and rules, Tax deductions, Income tax, Revenue, Medical fees

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