<p>Are parents' vested stock options (but not yet exercised) required to be reported/included as parents' investments ? </p>
<p>Below is what I found when I searched on the FAFSA website and it included stock options, so I wanted to see if anyone can help clarify the answer to my question above. Thank you.</p>
<p>"Investments include real estate (do not include the home you live in), trust funds UGMA and UTMA accounts, money market funds, mutual funds, certificates of deposit, stocks, stock options, bonds, other securities, installment and land sale contracts (including mortgages held), commodities, etc."</p>
<p>You need to report all types of vested stock options as if they were exercised at market value on the day you file the FAFSA. If the options are underwater, I’m assuming you can report the value as negative but you might need to get further clarification on that from the FAFSA hotline.</p>
<p>Regarding options that are underwater…you cannot offer up a “negative” value. Vested options that are underwater have a value of zero.</p>
<p>As far as I know, the only way to show the decrease in value of the options would be to flip them…meaning you exercise them at the higher price and then sell them at the lower price, showing the loss.</p>
<p>IE exercise price of $50, actual stock value $30.</p>
<p>Buy 100 shares at the exercise price of $50…your basis in the stock is $5000. Immediately sell at $30 per share ($3000), realizing a loss of $2000.</p>
<p>I can’t think of many investors at all that would do such a thing to purposely take advantage of a loss, since there’s no real risk in waiting for the options to return to the point where they are ‘in the money’.</p>