Federal Tax

Partnership Noncompensatory Options (Portfolio 721)

  • This Portfolio, Partnership Noncompensatory Options, No. 721, describes the tax consequences that flow from the issuance by a partnership of a noncompensatory option.

Description

Bloomberg Tax Portfolio, Partnership Noncompensatory Options, No. 721, describes the tax consequences that flow from the issuance by a partnership of a noncompensatory option. Tax implications to both the partnership and to the option holder are considered from the various stages in the life of such an option including issuance, sale or exchange, exercise (including cash settlement), and lapse. In addition, the effect of an outstanding noncompensatory option on the operations of the partnership is discussed.

Because the rules specific to noncompensatory options do not fully displace the law of options more generally, the Portfolio begins with an examination of both the common law and statutory tax rules applicable to options. Where appropriate, reference in the partnership-specific portion of the Portfolio is made to these more general rules.
This Portfolio may be cited as Abrams, 721 T.M., Partnership Noncompensatory Options.

Table of Contents

I. Introduction
II. Options: Definitions and Uses
III. Taxation of Noncompensatory Options
IV. Taxation of Noncompensatory Partnership Options

abrams-howard-2015
Howard Abrams
Visiting Professor
Harvard Law