ESO plan - Tax Implication on exercise

[nks7]

Last year I exercised all vested Employee Stock Options (“ESOs) plan allocations. Want to understand what would be my tax implication and what I need to report. I've not sold any shares yet, just exercised it. 

Note - in W2, nothing was mentioned about this exercise, not I've received any other form from employer.

[AmyC]

When you sell the stock, you will receive compensation in your w2, this should be added to your purchase basis. 

A stock option allows (but does not obligate) an employee to buy a specified number of shares of stock from a company for a specified price during a specified period of time. There are two categories of stock options.

• Nonstatutory (nonqualified) stock options.
• Statutory (qualified) stock options. Statutory stock options include incentive stock options (ISOs) and employee stock purchase plan options (ESPPs).

You can have a qualifying or nonqualifying disposition based on how long you hold the stock. When you sell the stock relatively soon, it is taxed as ordinary income. If you hold the stock, it can be taxed as a more favorable capital gain. The rules for statutory stock options (ISO and ESPP) are:

• One year after the stock was transferred to the taxpayer or
• Two years after the option was granted

If you have an ISO,  the spread from FMV to exercise price is included in your current income for calculating the AMT- it is not included in regular income. This surprises many people when they sell, thinking they have a favorable tax treatment. Which you do, for regular tax, just not AMT.

Since you didn't identify what kind of stock option, reply with more information, if you need additional help.