How are incentive stock options taxed?

Category: Incentive Stock Options

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