7/14    I've not worked for a year (ok I have as a temp and have made about
        $5K this year) and I'm thinking about excercising my options which
        according to eTrade is worth about $50K. What is the tax implication
        for doing so?
        \_ Excercising and selling or excercising and holding?
        \_ I assume you mean exercise and selling.  It is a damn good time
           to do it (not nec. all if all 50K is profit).  It is basically
           treated as income and since you are in a lower tax bracket...
                                -not a tax attorney
           \_ but it is still capital gain.  If you can offset any loss,
              may as well do it.
              \_ It is not capital gain if it is a disqualifying disposition.
                 Check out the following link for more info on it.
                 http://www.myoptionvalue.com/movschool/FAQ/Taxes/index.html
        \_ What are the odds the stock is going to rise this fall as the
           economy recovers?  If yes, can you afford to wait?
        \_ There are more than one type of option, with different tax
           ramifications.  Are they ISO options or NQ?
           \_ they are NQ                       -op
              \_ I had NQ's from Intel, and cashed out when I left (turned out
                 to be good timing).  I was required to exercise within 90 days
                 of leaving.  You have NQ options after a year?
                 Anyway, the taxes work like this:
                 Market Price - Option Price = $x
                 That $x is taxed at income rate (not capital gains).  There may
                 also be a short term capital gain/loss if the market price
                 changes in the time between exercising the option and selling
                 the stock. -emarkp
           \_ Do you mean NSO?
              \_ No, I meant NQ--as in 'non-qualifying' options.  What don't
                 they qualify for?  I dunno (as opposed to ISO--Incentive Stock
                 Options) -emarkp
                 \_ They should a lot like NSOs to me. I have never heard the
                    term NQ before, but it makes sense, since NSO stands for
                    Nonqualifying Stock Options. NSOs are a bit more
                    complicated than you described, since you can file a 63b
                    and they start to act like an ISO in many respects then,
                    but if you just excercise and sell them, emarkp is correct.
                    OP, if you want to perhaps reduce your tax burden, but
                    take on additional risk, look into filing a 63b
                    \_ I cashed out in 2000 and haven't had the need (or
                       opportunity!) to look into it.  I don't know what a 63b
                       is and it's quite possible that 'NQ' was Intel-speak or
                       that NSO is simply another TLA for the same thing.
                       -emarkp