Category: Incentive Stock Options

If you have incentive stock options, you may be familiar with the alternative minimum tax (AMT), and potentially the alternative minimum tax credit.  The alternative minimum tax is a complicating factor that may rear its head in a year that you exercise and hold incentive stock options. A key feature of incentive stock options is that, if you do a qualifying disposition, you may be able to claim long-term capital gains rates on the gain...

If you have incentive stock options but haven’t made a plan for them beyond “I’ll figure it out later,” you may want to consider the alternatives, and the alternatives are many. One of the many strategies that you may consider is to exercise some or all of your incentive stock options early. How early depends on many factors, but earlier than a faced expiration date. The Allure of Waiting to Exercise Incentive Stock Options It’s...

Incentive stock options, or ISOs, are a type of employee stock option. Often considered the favorable employee stock option as compared to non-qualified stock options, they may present an opportunity to receive a preferential tax treatment when you exercise and sell the incentive stock option shares. To obtain this preferential tax treatment, you must meet specific rules regarding the timeline between when the incentive stock option is granted, and when you sell your shares. The...

There are two types of employee stock options: incentive stock options, or ISOs, and non-qualified stock options, or NSOs. Generally speaking, incentive stock options are the more complicated of the two. These complexities may include holding period requirements, potentially preferential tax treatment, and the alternative minimum tax. You might find yourself with many questions about these important but often confusing parts of your incentive stock options. But before you dig too far into the complex...

Incentive stock options may be offered as part of an employee compensation package. In a best-case scenario, these options can offer an invaluable benefit to you as an employee. You may benefit most if your company offers incentive stock options (or ISOs) at a low exercise price, and then the company stock price increases substantially. For example, let’s say that you receive 1,000 incentive stock options with an exercise price of $10 per share. If...