The Tax Prophet :: September 2003 FAQ [an error occurred while processing this directive] September 2003   [an error occurred while processing this directive] [an error occurred while processing this directive]   Compensation Paid in Stock
  Violating Residence Exclusion Rules
  Legality of Off-Shore Asset Protection Trusts
[an error occurred while processing this directive][an error occurred while processing this directive] [an error occurred while processing this directive] I work for a closely-held corporation that wants to pay part of my compensation in its company stock. What are my tax consequences? [an error occurred while processing this directive] If the stock does not have much value, take the stock right now and have the company pay you a bonus equal to the taxes payable on receipt of the stock. The stock received is treated as compensation so the company needs to withhold on it. Otherwise, there are a variety of employee stock option programs that could meet your needs.

Also, you'll want to verify that the stock qualifies under IRC Sec. 1244 and you own it without restrictions. Sec. 1244 stock allows an ordinary loss, rather than a capital loss, on sale, or if the stock becomes worthless - a big advantage in such a circumstance. [an error occurred while processing this directive] See: The Tax Prophet's Section on Employee Stock Options [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] I bought a home in California 7 months ago and now want to sell it and move to Portland. I'll make $44,000 on the transaction. May I rollover the gain into my Portland home? [an error occurred while processing this directive] No, the residency rollover rules were terminated about 6 years ago. The current rule involves a residency exclusion which entitles you to exclude up to $250,000 in profits from the sale of a residence ($500,000 for joint filers) provided you owned and lived in the residence for at least 24 months. It sounds like you do not meet this test, unless your move was due to a change of employment, health or other unforeseeable circumstance, in which case, 7/24 of the exemption would apply. [an error occurred while processing this directive] See: The Tax Prophet's Tax Class on Principal Residence [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] Do you believe an off-shore asset protection trust can be successfully used to defeat a creditor's claim? [an error occurred while processing this directive] No. In my view, the creation of an off-shore trust to thwart U.S. law or potential creditors is improper, usually fraudulent and sometimes illegal. There could be legitimate uses for off-shore trusts, such as estate planning with multi-jurisdiction beneficiaries, but such trusts must comply with IRS disclosure and reporting requirements. [an error occurred while processing this directive] See: The Tax Prophet's Tax Class on Asset Protection [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive]