| Equity compensation awards | Tax treatment upon vesting or exercise | Your charitable gift option | Potential tax benefits | Gift rating |
|---|---|---|---|---|
| Vested Restricted Stock Units (RSUs) and Restricted Stock Awards (RSAs) held greater than 1 year from vesting§§ | Ordinary income tax on difference between fair market value (FMV) at vesting and amount paid for your stock | Eliminate capital gain recognition on difference between cost basis and FMV at gift date | Deduction at FMV, up to 30% of your adjusted gross income (AGI), with 5-year carryover | Ideal |
| Stock received upon Nonqualified Stock Option (NSO) exercise held greater than 1 year from exercise | Ordinary income tax on the difference between the exercise price and the stock's FMV at exercise | Eliminate capital gain recognition on difference between cost basis and FMV at gift date | Deduction at FMV, up to 30% of your AGI, with 5-year carryover | Good |
| Stock received upon Incentive Stock Option (ISO) exercise held greater than 1 year from exercise and 2+ years from grant§ | No ordinary income tax, although Alternative Minimum Tax (AMT) may apply | Eliminate capital gain recognition on difference between cost basis and FMV at gift date** | Deduction at FMV, up to 30% of your AGI, with 5-year carryover | Good |
| Vested RSUs and RSAs held 1 year or less | Ordinary income tax on difference between FMV at vesting and amount paid for your stock | No advantage to selling your stock and donating cash proceeds†† | Deduction at lesser of cost basis and FMV, up to 50% of your AGI, with 5-year carryover | Good |
| Stock received upon NSO exercise held 1 year or less | Ordinary income tax on difference between exercise price and your stock's FMV at exercise | No advantage to selling your stock and donating cash proceeds†† | Deduction at lesser of cost basis and FMV, up to 50% of your AGI, with 5-year carryover | Good |
| Unvested RSUs and unexercised ISOs | Not transferrable to charity | Not transferrable to charity | Not transferrable to charity | Unacceptable |
| Unexercised NSOs | Not applicable | Generally, not transferrable; exercise by charity may result in ordinary income tax to you | Deduction at lesser of cost basis and FMV, up to 50% of your AGI, with 5-year carryover | Unacceptable |
| Vested Performance Stock Units (PSUs) and Performance Stock Awards (PSAs) held greater than 1 year from vesting | Ordinary income tax on difference between FMV at vesting and amount paid for your stock | Eliminate capital gain recognition on difference between cost basis and FMV at gift date | Deduction at FMV, up to 30% of your AGI, with 5-year carryover | Ideal |
| Vested PSUs and PSAs held 1 year or less from vesting | Ordinary income tax on difference between FMV at vesting and amount paid for your stock | No advantage to selling your stock and donating cash proceeds†† | Deduction at lesser of cost basis and FMV, up to 50% of your AGI, with 5-year carryover | Good |
| Employee Stock Purchase Plans (ESPPs) Tax-qualified ESPPs held greater than 1 year from purchase and greater than 2 years from the grant | No ordinary income tax, although you must meet holding period requirements prior to gifting or there may be income recapture | Eliminate capital gain recognition on difference between cost basis and FMV at gift date. Recognize ordinary income on the discount amount. | Deduction at FMV, up to 30% of your AGI, with 5-year carryover | Moderate |
| Stock Appreciation Rights (SARs) | Generally, not transferrable; any transfer may result in adverse tax impact to you | Unacceptable |
*This generally is senior officers, directors, and shareholders with greater than 10% equity.
† Rule 144 is a regulation enforced by the U.S. Securities and Exchange Commission. The regulation provides an exemption that allows the public resale of restricted, unregistered, and control securities if a number of conditions are met. This includes how long the securities are held, the way in which the securities are sold, and the amount of securities that can be sold at a certain time.
§ Tax treatment of ISO stock transferred to charity before holding period requirements are met is not included. Please consult with appropriate tax or legal advisor on specifics.
** Difference between FMV at exercise and exercise price is an AMT preference item included in your AMT calculation. You may lose AMT preference item on contribution.
†† 60% of AGI deduction limit with a five-year carryover is permitted for charitable contributions of cash. Note: any short-term capital gains tax paid reduces value of gift to charity.
§§ Additional considerations are involved when gifting restricted stock. You may own stock acquired from equity compensation awards that, due to your status as an executive in the business or other factors, may have resale restrictions. Donating restricted stock may require due diligence by the charity prior to acceptance, as the gifting process can involve certain additional paperwork and regulatory filings.