Re:usairways 2003 Stock Option Payout Number 1

[Severed-N-Happy]

Just got an email from etrade for electronic delivery of form 1099 from cashing in our disbursement number 1..Since we were taxed already on these shares by having them reduced in number by 30 some odd percent, why are we having to pax tax AGAIN on the proceeds? Are am I missing the legal loophole/proper tax form to circumvent it?. Or maybe it is simply legal double taxation....any ideas in the house before the free IRS hotline gets a call??

 

[UsPerfEngr]

Severed-N-Happy

I'm no tax guru, but I believe the chunk that was paid by the withheld shares was the Capital Gains tax.

Your gonna get dinged again when you report the moneys as income with the 1099.

That's just the way it works unless you can find someplace to put the money where it won't yet be eligible to be taxed as income...

 

[oldiebutgoody]

I believe that the 35% they took was for INCOME TAX withholdings, since the stock was "paid" to you by the company. You would pay capital gains taxes on whatever you profited over the $7.25 or so you acquired it at (paid taxes on) when you sold it. Don't forget, if you sold it for less, you may get a writeoff for that (capital loss). I'm no expert, but I believe this is the way it works.

 

[Severed-N-Happy]

I believe that the 35% they took was for INCOME TAX withholdings, since the stock was "paid" to you by the company. You would pay capital gains taxes on whatever you profited over the $7.25 or so you acquired it at (paid taxes on) when you sold it. Don't forget, if you sold it for less, you may get a writeoff for that (capital loss). I'm no expert, but I believe this is the way it works.

That makes much more sense, don't know how that one slipped by me..LOL..so we consider the fact we "paid" somewhere around 7.34 per share I think, which was the exerciseable option price, I received a net of 75 shares, I sold at 9.00, so I would only pay tax on 75 shares times the profit diff of 1.66.
That I can tolerate.

 

[ojxux]

Don't forget, if you sold it for less, you may get a writeoff for that (capital loss). I'm no expert, but I believe this is the way it works.


That is correct. Chances are you have a capitol loss - which means you can deduct that from your taxes