ESOP Gains Look Good, But Taxes Begin When Exercised

Employee Stock Ownership Plans (ESOPs) can appear to be a lucrative benefit, but employees need to be aware of the tax implications that begin as soon as they exercise their options.

Understanding when the tax burden begins is critical for anyone participating in an ESOP. While the potential for significant gains exists, the tax liability is triggered at the point of exercising the option to purchase the company stock, not when the stock is eventually sold.