STOCK OPTION TAX CONSEQUENCES: EXAMPLE
01.Core Concepts
No income tax consequence Valentina granted ISO 100 shares at $10 per share (FMV) June 20, 2025 No income tax consequence Valentina exercises option (FMV = $14 per share) February 20, 2026 LTCG = $700 Valentina sells shares for $1,700 July 25, 2027 If holding period requirements are not met by Valentina, then the $700 gain is income taxable as: $400 (($14 - $10) x 100 shares) = Ordinary Income $300 = Capital Gain