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Subject:   Transfer nqso to non-us citizen
Date:   Fri, 09 Jun 2000
From:   Rick

Hello,

I am about to be issued NQSO in the company I work for. My wife is from Brazil and does not have US citizenship or residence (yet). Do I have a chance to avoid/limit future tax event on these options if I were to set up an offshore account in my wife's name and transfer the non-exercised options to control of that account? Would this then require that we live outside the country and "never come back"?

Also - I've heard thgat Portugal and Mexico are the best places to live and receive this kind of compensation. Do you have any idea what the tax environment is like in Brazil and other countries - does anyone maintain a list on this topic?

Thanks for any help you could provide in answering this question.

Rick

Answer

Date:   29 Jun 2000

Hello Rick,

As long as you are a resident of the U.S., any exercise of the options will result in ordinary income to you. According to the U.S. tax laws, there can be no assignment of the tax liability associated with earned income.

I don’t keep a list of off-shore tax havens for option planning.

My philosophy is you will probably be paying a higher price for lost opportunities when running from your tax liabilities than the amount you will gain.

Don’t panic. Plan.

Good luck!

Mike Gray

For more information about non-qualified stock options, request our free report, Non-Qualified Stock Options - Executive Tax and Financial Planning Strategies.

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained in this answer was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.