ISOs Flashcards
1
Q
ISO Grant
A
Company gives right to purchase a specified number of shares at a fixed (strike) price for a defined period
Usually 10 years
2
Q
ISO Spread
A
FMV @ exercise - strike price
3
Q
ISO Qualifying Disposition
A
Held 2 years from grant and 1 year from exercise
Gain taxed as LTCG
4
Q
ISO Disqualifying Disposition
A
Spread is taxed as ordinary income
Gain taxed as short or long-term capital gain depending on length held
5
Q
ISO taxation at exercise
A
None due, but spread is subject to AMT if FMV is higher than strike price
