The Nebraska Special Capital Gains/Extraordinary Dividend Election, elected and claimed on Form 4797N, can provide a substantial tax break for employees who acquire company stock over their years of employment. This election allows employees who own stock in their employer, or former employer, to exclude that stock’s capital gains income from their Nebraska taxable income under certain circumstances.
More and more employers are offering stock purchase plans and stock-based compensation to their employees, which can make for an excellent opportunity to avoid state income tax on capital gains from the sale of a stock in Nebraska. Some questions to consider if you (or your company) might benefit from this rare opportunity in Nebraska tax law:
- Does your employer offer an employee stock purchase program?
- Do you receive employee stock grants from your employer?
- Do you own stock in and work for your own company?
- Did you know that Nebraska offers tax breaks for these situations?
By understanding, identifying, and mitigating the common problems inherent in the decision-making process, we can make better choices and gain greater confidence.