uk based stock options

Hi,

I'm a dual us/irish citizen working in the uk. A number of years ago I was granted stock options by my company and I've sold these so capital gains taxes are due in the uk on the small amount that is over the capital gains threshold. From reading the US/UK tax traety I believe that I don't need to pay tax on these in the US. Should I fill in an 8833 to declare these or would they not qualify ?

Max

When you buy stock options the difference between price you pay and he market price will be taxed as income by the IRS. Any future gains will be taxed as capital gains. So did you pay income tax when you first got the shares?

What Article are you relying on to exempt your UK stock options from US taxation?

I'm looking at Article 14 with the further explanation from the hmrc site as described here
newcomer link: http://www.hmrc.gov.uk/manuals/dtmanual/dt19939d.htm [nonactive]

Does this just mean that the tax I paid in the uk can be used as income tax credit and the  difference between the price I paid and the value of them when I bought the should be treated as income when filing for the US.

I did not hold on to the stock for any time after buying it but It will be treated as capital gains in the uk.

OK - as a US citizen you cannot exempt either income or gains because of the saving clause.

Any increase in value would be treated as income - and depending on dates of your residence and the kind of the plan - most likely treated identically for US and UK tax purposes.

Your employer will doubtless have withheld PAYE and NIC. If you exercised and sold on the same day you may have a small loss equal to the brokerage costs of the sale.

You'll have to source the income between grant and exercise for calculating the amount of current year income qualifying for the foreign earned income exclusion.

Any tax that does not relate to excluded income can be claimed as a foreign tax credit.

Keep an eye on AMT (Form 6251). US stock options can trigger AMT; I'm not sure about foreign ones.

Ok, so I understand that this not exempt. What is confusing me is whether it is treated as income or capital gains for US tax purposes. From the information available it sounds like its income for US purposes but my employer has advised that i should report it to hmrc as capital gains in the uk and they have not withheld paye.