Employee Stock Options
Employee Stock Options
Public Company Employees/Non-CCPC Employees | CCPC Employees |
Report taxable employment benefit when the options are exercised
| Report taxable employment benefit when shares exercised are ultimately sold
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Employment Benefit and Division C deduction: Taxable Employment Benefit = [FMV of the shares on the date the options are exercised] – [option price] Division C deduction of 50% of the taxable benefit if the following condition is met:
The Division C deduction is reported in the same tax year as the taxable employment benefits are reported (i.e. when the option is exercised) | Employment Benefit and Division C deduction: Taxable Employment Benefit =[ FMV of the shares on the date the options are exercised] – [option price] Division C deduction of 50% of the taxable benefit if the following condition is met: (i) If the option is not in the money, at the grant date or (ii) If the option is in the money when granted: as long as the employee holds the shares for 24 months after exercising the option. Then you can still get a division C deduction. The Division C deduction is reported in the same tax year as the taxable employment benefits are reported (i.e. when the exercised shares are ultimately sold) |
Capital Gains: When the shares are eventually sold: Capital Gain = Proceeds of Disposition – FMV of the Shares on the date the shares were exercised. | Capital Gains: Capital Gain = Proceeds of Disposition – FMV of the shares on the date the shares were exercised. Note: for CCPC employees, the capital gains and the taxable benefits are recognized on the same date. |