Frequently Asked Questions

If your employer has granted you incentive stock options (ISOs), you’ve probably read about the alternative minimum tax (AMT) and qualifying and disqualifying dispositions. Perhaps the complication has left you wondering what this means for you as a taxpayer.

While AMT and holding periods for qualified sales may be important from a tax-reporting standpoint, they may be irrelevant if you simply exercise and sell your ISOs in a cashless transaction. Before you spend too much time studying the nuances, you might want to ground yourself on other key points regarding the tax treatment of ISOs. Learn more

Incentive stock options are a powerful compensation tool that can help you grow your wealth. Companies award them to employees as a retention vehicle, to reward specific successes or as an incentive when trying to attract new employees.

There are several advantages to incentive stock options, including:

• Incentive Stock Options have a simple process for exercising.
• You choose when to exercise your Incentive Stock Options.
• Incentive Stock Options offer the potential to participate in stock price appreciation.
• Incentive Stock Options are not subject to payroll taxes.
• Incentive Stock Options can qualify for long-term capital gains.
• You may get Alternative Minimum Tax Back as AMT credit.
• ISOs allow you to participate in the success of the company
• You can manage the cash flow required to cover the cost of the Alternative Minimum Tax.

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