Nonqualified Stock Option definition: Copy, customize, and use instantly
Introduction
The term "Nonqualified Stock Option" refers to a type of stock option that does not qualify for favorable tax treatment under the Internal Revenue Code. It is typically issued to employees, consultants, or other service providers as part of compensation.
Below are various examples of how "Nonqualified Stock Option" can be defined in different contexts. Copy the one that fits your needs, customize it, and use it in your contract.
Definition of "Nonqualified Stock Option" as employee compensation
This definition ties "Nonqualified Stock Option" to employee compensation.
"Nonqualified Stock Option" means a stock option granted to an employee or consultant that does not meet the requirements for favorable tax treatment under Section 422 of the Internal Revenue Code, and therefore, is subject to regular income tax treatment.
Definition of "Nonqualified Stock Option" for tax treatment
This definition connects "Nonqualified Stock Option" to its tax implications.
"Nonqualified Stock Option" refers to a stock option that is not eligible for special tax treatment, and the holder will incur ordinary income tax upon the exercise of the option based on the difference between the exercise price and the fair market value of the stock.
Definition of "Nonqualified Stock Option" as a stock-based compensation
This definition links "Nonqualified Stock Option" to stock-based compensation plans.
"Nonqualified Stock Option" means a stock option granted as part of an employee's or consultant's compensation, where the option does not qualify under the IRS rules for favorable tax treatment associated with incentive stock options.
Definition of "Nonqualified Stock Option" for ownership rights
This definition applies "Nonqualified Stock Option" to ownership rights.
"Nonqualified Stock Option" refers to an option that grants the holder the right to purchase shares of the company's stock at a predetermined price, but does not confer the same tax benefits as an incentive stock option under Section 422 of the Internal Revenue Code.
Definition of "Nonqualified Stock Option" for equity compensation
This definition ties "Nonqualified Stock Option" to equity compensation.
"Nonqualified Stock Option" means an option granted to an employee or other service provider that allows the purchase of company stock at a set price, and the income derived from it is taxed as ordinary income rather than at the capital gains rate.
Definition of "Nonqualified Stock Option" in relation to tax implications
This definition connects "Nonqualified Stock Option" to tax treatment.
"Nonqualified Stock Option" means a type of stock option that does not meet the qualifications set forth by the IRS for incentive stock options, resulting in the option holder being subject to ordinary income tax upon exercise.
Definition of "Nonqualified Stock Option" in employee stock plans
This definition applies "Nonqualified Stock Option" to employee stock option plans.
"Nonqualified Stock Option" refers to an option granted to an employee under a stock option plan that does not satisfy the IRS requirements for preferential tax treatment, and is instead subject to regular income tax upon exercise.
Definition of "Nonqualified Stock Option" for taxation at exercise
This definition ties "Nonqualified Stock Option" to taxation on exercise.
"Nonqualified Stock Option" means an option that, upon exercise, results in taxable income based on the spread between the exercise price and the fair market value of the underlying stock, with that income subject to regular income tax.
Definition of "Nonqualified Stock Option" for eligible employees
This definition links "Nonqualified Stock Option" to eligibility requirements.
"Nonqualified Stock Option" refers to stock options granted to employees or consultants that are not restricted by the IRS's rules governing incentive stock options, and are instead taxed under the general tax rules for stock options.
Definition of "Nonqualified Stock Option" for capital gains tax treatment
This definition connects "Nonqualified Stock Option" to capital gains treatment.
"Nonqualified Stock Option" means an option that, when exercised, is not eligible for the preferential capital gains tax treatment typically granted to incentive stock options, and instead is taxed as ordinary income.
Definition of "Nonqualified Stock Option" for consultant grants
This definition applies "Nonqualified Stock Option" to consultant agreements.
"Nonqualified Stock Option" refers to a stock option granted to a consultant, where the option is not subject to the tax rules applicable to incentive stock options, and is instead taxed as ordinary income when exercised.
Definition of "Nonqualified Stock Option" for vesting schedules
This definition ties "Nonqualified Stock Option" to vesting schedules.
"Nonqualified Stock Option" means a stock option that vests according to the schedule outlined in the option agreement, with the tax consequences being ordinary income at the time of exercise, rather than preferential treatment.
Definition of "Nonqualified Stock Option" for stock option grants
This definition links "Nonqualified Stock Option" to stock option grants.
"Nonqualified Stock Option" refers to an option granted by a company that provides the holder the right to buy shares of stock at a fixed price, but does not meet the criteria for special tax treatment under the Internal Revenue Code.
Definition of "Nonqualified Stock Option" for corporate officers
This definition connects "Nonqualified Stock Option" to corporate officer compensation.
"Nonqualified Stock Option" means an option granted to a corporate officer that does not qualify for the tax benefits of an incentive stock option, and instead, income is taxed as ordinary income upon exercise.
Definition of "Nonqualified Stock Option" for tax reporting
This definition ties "Nonqualified Stock Option" to tax reporting requirements.
"Nonqualified Stock Option" refers to an option granted that is reported as ordinary income for tax purposes when exercised, with the difference between the exercise price and market value being subject to income tax withholding.
Definition of "Nonqualified Stock Option" for ordinary income tax
This definition links "Nonqualified Stock Option" to ordinary income tax treatment.
"Nonqualified Stock Option" means a stock option that, upon exercise, is taxed as ordinary income based on the difference between the exercise price and the fair market value of the stock on the exercise date.
Definition of "Nonqualified Stock Option" for compensation structure
This definition connects "Nonqualified Stock Option" to compensation packages.
"Nonqualified Stock Option" refers to a stock option offered as part of an employee’s compensation that does not meet the IRS requirements for incentive stock options, and is instead taxed as ordinary income upon exercise.
Definition of "Nonqualified Stock Option" for holding period
This definition applies "Nonqualified Stock Option" to holding periods.
"Nonqualified Stock Option" means a stock option where the exercise price is set by the option agreement, and upon exercise, the holder may be required to pay taxes on the difference between the exercise price and the current market price, with the holding period determining whether capital gains tax applies on the sale.
Definition of "Nonqualified Stock Option" for stock-based benefits
This definition ties "Nonqualified Stock Option" to employee benefits.
"Nonqualified Stock Option" refers to an option that grants employees the right to purchase company stock at a set price, but does not offer the tax benefits associated with incentive stock options, such as the deferral of taxes until the sale of the stock.
Definition of "Nonqualified Stock Option" for tax liability
This definition links "Nonqualified Stock Option" to tax liability.
"Nonqualified Stock Option" means a stock option that, when exercised, results in a tax liability for the option holder based on the spread between the exercise price and the market value of the stock.
Definition of "Nonqualified Stock Option" for company equity plans
This definition applies "Nonqualified Stock Option" to company equity plans.
"Nonqualified Stock Option" refers to a type of stock option granted by a company as part of its equity compensation plan that does not meet the IRS qualifications for incentive stock options, resulting in different tax treatment.
Definition of "Nonqualified Stock Option" for option exercise
This definition connects "Nonqualified Stock Option" to the exercise process.
"Nonqualified Stock Option" means a stock option that may be exercised at any time during the option's term, with the income derived from exercise being subject to ordinary income tax rather than favorable capital gains treatment.
Definition of "Nonqualified Stock Option" for performance-based compensation
This definition ties "Nonqualified Stock Option" to performance-based pay.
"Nonqualified Stock Option" refers to a stock option granted based on performance criteria, with the income resulting from its exercise being taxed as ordinary income.
Definition of "Nonqualified Stock Option" for employee benefits
This definition links "Nonqualified Stock Option" to employee stock plans.
"Nonqualified Stock Option" means an option granted to an employee under a compensation plan where the tax treatment does not offer the same benefits as an incentive stock option and is taxed as ordinary income when exercised.
Definition of "Nonqualified Stock Option" for stock price appreciation
This definition connects "Nonqualified Stock Option" to stock price appreciation.
"Nonqualified Stock Option" refers to a type of stock option that allows the holder to benefit from stock price appreciation, but with income taxed as ordinary income upon exercise rather than capital gains.
Definition of "Nonqualified Stock Option" for tax compliance
This definition applies "Nonqualified Stock Option" to tax compliance requirements.
"Nonqualified Stock Option" means an option for which the holder is required to pay ordinary income tax at the time of exercise, with the company responsible for withholding and reporting the applicable taxes.
Definition of "Nonqualified Stock Option" for limited exercise rights
This definition ties "Nonqualified Stock Option" to exercise conditions.
"Nonqualified Stock Option" refers to a stock option that can only be exercised under certain conditions specified in the option agreement, and is subject to ordinary income tax at the time of exercise.
Definition of "Nonqualified Stock Option" for post-employment benefits
This definition connects "Nonqualified Stock Option" to post-employment compensation.
"Nonqualified Stock Option" means an option granted to an employee that remains exercisable for a period after employment ends, subject to regular income tax when exercised.
Definition of "Nonqualified Stock Option" for capital gains exclusion
This definition links "Nonqualified Stock Option" to exclusions from capital gains treatment.
"Nonqualified Stock Option" refers to a stock option that is not eligible for exclusion from ordinary income tax and is instead taxed as regular income when the option is exercised.
Definition of "Nonqualified Stock Option" for retirement plans
This definition connects "Nonqualified Stock Option" to retirement benefits.
"Nonqualified Stock Option" means an option granted outside of a qualified retirement plan, which does not offer favorable tax treatment and is taxed at ordinary income rates when exercised.
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