Puerto Rico Option to Purchase Stock - Long Form
Description
How to fill out Option To Purchase Stock - Long Form?
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FAQ
As has been widely reported, Puerto Rico's Act #20 and Act #22 provides incentives for high net worth U.S. citizens to move to Puerto Rico and potentially reduce their 39.6% federal income tax (plus any applicable state tax) to a 0% 4% Puerto Rico income tax rate.
What's more, there is no tax on dividends, and no capital gain tax in Puerto Rico.
Traders will go from paying U.S. federal and state income taxes on capital gains to paying zero taxes on capital gains as a bona-fide resident of PR. That's a huge savings! Investment managers charge advisory fees to investors.
To the extent the plan is considered qualified for Puerto Rico purposes, the exercise of the stock options will not trigger income taxation. Such income will be recognized only upon the sale of the shares, at which time it will be reported as a capital gain.
To get started, you can hire an attorney to file the paperwork for Act 22, or, you can file yourself through Puerto Rico's Single Business Portal.
Act No. 22 of 2012, Seeks to attract new residents to Puerto Rico by providing a total exemption from Puerto Rico income taxes on all passive income realized or accrued after such individuals become bona fide residents of Puerto Rico.
You have taxable income or deductible loss when you sell the stock you bought by exercising the option. You generally treat this amount as a capital gain or loss. However, if you don't meet special holding period requirements, you'll have to treat income from the sale as ordinary income.
Act 22 of 2012 also known as the Act to Promote the Relocation of Investors to Puerto Rico (Spanish: Ley para Incentivar el Traslado de Inversionistas a Puerto Rico) is an act enacted by the 16th Legislative Assembly of Puerto Rico that fully exempts local taxes on all passive income generated by individuals that
To establish residence under the Act, someone must create a presumptive residence in Puerto Rico, live there for at least 183 days of the year, and cannot have a home outside Puerto Rico.
An individual is considered to be a bona fide resident of Puerto Rico if three tests are met. The individual must be present for at least 183 days during the taxable year in Puerto Rico or satisfy one of the other four presence tests (the presence test).