MTL Corporation had a terrific 2018 fiscal year! As a result, MTL's Board of Directors rewarded me by approving the following compensation in addition to my regular $300,000 annual salary:

$100,000 cash bonus

1,000 shares of MTL stock

100 non-qualified stock options (NQOs)

50 incentive stock options (ISOs)

The $100,000 bonus check was ready for me on December 31, 2018, but I did not pick it up until January 3, 2019 because I took a few days off around New Year's. I received the 1,000 shares of MTL stock on January 1, 2019 when the share price was $40. The NQOs and ISOs were granted on January 1, 2019 and vest on December 31, 2019. Each option gives me the right to purchase 10 shares of MTL stock for $40 per share. MTL's share price is expected to be $45 at the end of 2019, so I am thinking I will exercise all of the NQOs and ISOs on the date they vest and sell the shares that same day. I think I will also sell the 1,000 shares I received on January 1, 2019 at the same time. MTL has a "clawback" provision that requires me to repay this additional compensation if the company has to restate its earnings.

I want to understand how this additional compensation will affect my tax returns for 2018 and 2019. I was also wondering if there is anything I should do differently to reduce my tax liability. As you may recall, I am in the top marginal tax bracket for individual taxpayers. I look forward to hearing from you soon!