3 ms·

I am not familiar with american tax law, why do you need to pay tax on buying share options? The reasoning behind this law? We have capital gains tax which i b

• schrodinger 10y ago
  When you exercise an option, you are paying the strike price for something that may be worth more. For example, you may have an option with a strike price of $1, but the shares are currently worth $10. That $9 is considered taxable income.
  • URSpider94 10y ago
    That's not quite right. It's not taxable income, per se, but it is figured into calculating the alternative minimum tax (AMT).