Add an employee stock option grant (ESOG)
Getting started
Employee stock options require tracking both the exercise price (the price at which you buy) and the actual market price of the security. You enter the exercise price when you add your employee stock option grant in Quicken. When you exercise, Quicken asks you for the market price and calculates your gain.
When you add an employee stock option grant, Quicken adds an Option security in your Security List. Until the options vest and become available to you, this security has a zero market value in your portfolio.
Quicken also tracks your vesting schedule so you know how many options are available to you at any given time. Quicken adds a series of vest transactions to your investment transaction list so you know exactly how many options have vested at any given time. For a new grant, the vest transactions will typically all have future dates.
Select an investment account
You can use an existing investment account or add a new one. To simplify your own record keeping, and for easier visibility of the vesting schedule in your investment transaction list, it is preferable to add an investment account used exclusively for tracking your stock option grant.
Add the employee stock option grant
Use the Enter Transaction dialog to grant employee stock options.
If your options have an irregular vesting schedule
In some vesting schedules, the options vest at one specified percent for the first few years, then at a different specified percent for the remaining years. For example, you may have a four-year vesting schedule in which you vest 20 percent of your options each year for two years, then vest 30 percent of your options each year for the remaining two years.
In this scenario, you'd add an employee stock option grant for the first two years at 20 percent, then run it again to add a separate grant for the last two years at 30 percent.
Notes
Each time you exercise an employee stock option, Quicken adds three transactions to your investment transaction list: an Exercise, Buy, and Sell. These are used to help track the number of vested shares you have. Very likely, your broker also uses multiple transactions, but they may be of different transaction types. For this reason, if you've activated this account for online account services, it is better not to download exercise transactions from your broker. You can still download transactions tracking dividends and the like, but don't accept the transactions for the actual exercise.
What is the holding period for nonqualified stock options?
In some vesting schedules, the options vest at one specified percent for the first few years, then at a different specified percent for the remaining years. For example, you may have a four-year vesting schedule in which you vest 20 percent of your options each year for two years, then vest 30 percent of your options each year for the remaining two years.
In this scenario, you'd add an employee stock option grant for the first two years at 20 percent, then run it again to add a separate grant for the last two years at 30 percent.
What is the holding period for incentive stock options?
If you exercise the option and sell the stock on the same day, you're generally taxed on the difference between the option price and the sale price value on the day you exercise your option. This amount is taxed at ordinary income tax rates. If you exercise the option and hold the stock, the fair market value on the day you exercise becomes your cost basis, and any appreciation on this price will be taxable as a capital gain when you do sell.
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