At the Federal level, long-term capital gains tax, since it's the profit from selling shares (not options) in the company which I owned for more than a year. A

At the Federal level, long-term capital gains tax, since it's the profit from selling shares (not options) in the company which I owned for more than a year. At the state level, California treats everything as regular income. It's considered an "installment sale", meaning I can defer paying taxes on the escrowed amount until the tax year in which I receive payment. There are some limits on this that I don't fully understand, which I paid my accountant to figure out and justify to the IRS if I get audited.