INCENTIVE STOCK OPTIONS (ISOs)
01.Core Concepts
• At grant – no regular tax or AMT • At exercise – no regular tax; AMT adjustment (bargain element) • AMTI > regular taxable income • At sale – Capital gain under regular tax; negative AMT adjustment due to higher basis • AMTI < regular taxable income • Example: Grant price $50; FMV at exercise $70; Sale price $80 • At grant: no AMT • At exercise: positive AMT adjustment $20 • At sale: negative AMT adjustment $20