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To see learn how transactions affect your taxes, continue to read:
Incentive Stock Option transactions fall into five possible categories, each of which may get taxed a little differently.
With an ISO, you can:
- Exercise your option to purchase the shares and hold them.
- Exercise your option to purchase the shares, then sell them any time within the same year.
- Exercise your option to purchase the shares and sell them after less than 12 months, but during the following calendar year.
- Sell shares at least one year and a day after you purchased them, but less than two years since your original grant date.
- Sell shares at least one year and a day after you purchased them, and at least two years since the original grant date.
Each transaction has different tax implications. The first and last are the most favorable. The time at which you sell determines how the proceeds are taxed. For details, click here: ISO
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