If our company gives Stock to employees for free is there a tax
ramification upon making the award of the stock?

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Request for Question Clarification by websearcher-ga on 06 May 2005 11:11 PDT

Hi:

We need to know what country and state/province you are in.

Thanks. 

websearcher

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Clarification of Question by braddva-ga on 06 May 2005 11:36 PDT

I am in Pinellas County Florida, USA (Palm HArbor), 34684

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Request for Question Clarification by markj-ga on 06 May 2005 13:32 PDT

braddva --

The subject line of your question refers to "stock options," while the
text of your question refers to gifts of stock (not options).  Could
you clarify which is the correct reference?

markj-ga

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Clarification of Question by braddva-ga on 06 May 2005 13:39 PDT

Good question, I guess I would like to know both if possible.

Consult a tax advisor.  But I would think it is treated just like if
they gave you $.  You need to pay tax on the value when you recieve
it.  Then you can take long or short term capital gains when you sell.

stocks that company gives to employees free is considered as payment
for service and is subject for social security and medicare tax based
on the fair market value. the company will include this amount in W2.
it is aslo included in the taxable income.

for stock options the difference between fair market value and granted
price is recognized as income and will be included in W2 box 1,3,5 and
box 12 code V
there may be circumstances when income is recognized - at the time of
granted or execise.