Taxes On Restricted Crypto And Options Can Be Confusing: Expert Take

All of these raise tax issues, and can be confusing.

Before we address crypto itself that is awarded to workers in connection with services, let's start with stock options, and options to acquire crypto.

Two types of optionsThere are two main types of options: incentive stock options and non-qualified stock options.

Non-qualified optionsNon-qualified options are not taxed as favorably as ISOs, but there is no AMT trap.

Options to buy cryptoOptions to buy crypto are treated just like nonqualified options to buy stock.

Restricted stock or crypto means delayed taxSuppose that you receive stock or any other property - including crypto - from your employer with conditions attached.

Special restricted tax rules in Section 83 of the Internal Revenue Code kick in.

You can elect to be taxed soonerThe restricted property rules generally adopt a 'wait and see' approach for restrictions that will eventually lapse.

As if the restricted property rules and stock options rules were each not complicated enough, sometimes you have to deal with both sets of rules.

He is the author of numerous tax books, and writes frequently about taxes for Forbes.com, Tax Notes, and other publications.