Incentive Stock Options Quiz

Incentive Stock Options Quiz

Test your knowledge of incentive stock options (ISOs).

Please answer the following 14 questions. This quiz is also a course of study. The answer key links to content on the topic for follow-up reading. For in-depth courses of study that offer CE credits, see the myStockOptions Learning Center.

1. What is an incentive stock option (ISO)?

2. What is the difference between incentive stock options and nonqualified stock options (NQSOs)?

3. For companies, what is the disadvantage of granting ISOs instead of NQSOs?

4. Which of the following cannot receive a grant of ISOs?

5. What is the limit on the value of ISOs that can become exercisable in the same calendar year?

6. After ending employment with the company for no special reason (e.g. disability), under the tax code how long do you have to exercise ISOs before they lose their tax-qualified status and become NQSOs?

7. If you satisfy the statutory ISO requirements, what is the special tax benefit offered by ISOs?

8. How long must you hold ISO shares to qualify for the beneficial ISO tax treatment?

9. What is a disqualifying disposition?

10. After an employee exercises ISOs and holds the shares through the end of the calendar year, what tax information from the exercise is included on Form W-2?

11. After an employee exercises ISOs and sells the shares immediately, what tax information from the exercise is included on Form W-2?

12. What is the alternative minimum tax (AMT)?

13. Why are people with ISOs sometimes subject to the AMT?

14. After an ISO exercise, what form(s) must the company file with the IRS and send to you soon after the end of the calendar year?

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