ISOs
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ISOs

ISOs

Incentive stock options carry great potential tax benefits, but their taxation can be complex, especially when the alternative minimum tax comes into play. Browse an overview of this section below, or explore the subtopics to the left. See also the ISO sections of the Tax Center.

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Selected Articles

Taxes

Incentive Stock Options: Five Key Points You Must Know To Make The Most Of ISOs And Avoid Costly Mistakes This is premium content

The myStockOptions Editorial Team
Incentive stock options (ISOs) are potentially quite valuable. However, they are more rule-bound, complex, and risky than nonqualified stock options (NQSOs). In fact, mistakes with ISOs can be quite costly. This article presents five key aspects of ISOs that you must know at the time of grant, before you exercise the options, and when you sell the shares.
Taxes

Stock Option Fundamentals (Part 5): Incentive Stock Option Taxation & Alternative Minimum Tax This is premium content

Marilyn Renninger
Learn how and when income from ISOs is subject to taxes, including the alternative minimum tax. You must consider taxes at both exercise and sale to put together an optimal strategy.
Taxes

VIDEO! Incentive Stock Options (ISOs): Taxes

Bruce Brumberg
To make the most of incentive stock options (ISOs), you must understand their tax fundamentals, explained by the editor-in-chief of myStockOptions.com in this engaging video.
Show More Selected Articles
Taxes Advanced

ISOs: Tax-Return Tips And Traps This is premium content

myStockOptions Editorial Team & Contributors
Tax reporting with incentive stock options (ISOs) can be tricky. Learn what you need to report on your return at each stage of your ISO's life cycle.
Taxes Advanced

IRS Form 3921 For Incentive Stock Options: What You Need To Know, And How It Can Help You Understand ISO Taxation This is premium content

Bruce Brumberg
Incentive stock option (ISO) exercises made during a calendar year are reported to you and the IRS on Form 3921 early in the following year. This article explains what you need to know about the information on the form, and how the form can help you better understand the complexities of ISO taxation.
AMT Advanced

NEW! 7 ISO Strategies That Can Help Minimize Alternative Minimum Tax This is premium content

myStockOptions Editorial Team
Exercising incentive stock options (ISOs) and holding the shares beyond the calendar year of exercise triggers the need for the alternative minimum tax (AMT) calculation. While you should consult a financial advisor, accountant, or tax lawyer about the AMT and your personal situation, this article details several strategies that experts often suggest.
This is simply a selection of the many articles in this section.
Use the navigation to the left to explore all of the categories in this section.

Selected FAQs

Basics

What are the top 10 questions I should ask about my stock options?

You should know the answers to the following questions. Understanding the topics involved will help you make the most of your stock options and prevent costly mistakes...
Basics

What is an incentive stock option?

An incentive stock option (ISO) is a type of stock option that qualifies for special tax treatment...
Taxes Advanced

How will my broker know which shares to sell? Should I identify them in some way? This is premium content

If you have more than one batch of company stock, you are responsible for providing your broker with enough information to identify which shares to sell. If you do not specify...
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Taxes Advanced

How do I use stock that I own to exercise an option in a stock swap? What is the tax treatment? This is premium content

A "stock swap" or "stock for stock" exercise is a stock option exercise in which the exercise price is paid with shares of company stock you own...
Taxes Advanced

What happens with taxes on stock options if I live or work in different states during the period between grant and exercise? This is premium content

Generally, each state you live in determines what income is taxable and when. For administrative ease, many companies...
Taxes Advanced

I just sold stock that I acquired from option exercises and restricted stock vesting a few years ago. How do I rediscover the cost basis for my tax return? This is premium content

Let's first review the tax rules and the W-2 reporting. The tax basis for...
Taxes Advanced

In what ways can I pay my taxes if I don't have the money to pay them with my tax return?

If you simply lack the funds to pay your income tax, you may want to apply for a payment agreement on the...
Taxes Advanced

Can I use ISO stock to exercise NQSOs? Is this a disqualifying disposition that eliminates the special tax treatment for ISOs? This is premium content

Yes, you can use ISO stock to exercise NQSOs without disqualifying it, as the...
Taxes Advanced

When I take an international assignment, will taxes on my stock compensation be equalized? This is premium content

At some companies, international assignments are often accompanied by what is commonly called an equalization package. To give you an incentive to accept the international assignment, the company agrees to...
AMT

What is the alternative minimum tax?

Running parallel to the regular tax system, the alternative minimum tax (AMT) was designed to require extremely wealthy people to pay their fair share of taxes when credits and deductions could otherwise reduce or eliminate their tax liabilities. However, the reach of the AMT has expanded over time to hit middle-income people it was never intended to tax...
AMT

How can incentive stock options trigger the alternative minimum tax?

ISOs affect your AMT liability in two ways. You should consider these points in your planning both at ISO exercise and when you later sell the acquired shares...
This is simply a selection of the many FAQs in this section.
Use the navigation to the left to explore all of the categories in this section.