Just to make this clear (correct me if I'm wrong)... If you buy stock at market value, and it increases in value over time, you only pay tax when you sell it.

Just to make this clear (correct me if I'm wrong)... If you buy stock at market value, and it increases in value over time, you only pay tax when you sell it. But if you exercise a stock option (in which you purchase stock for a [typically] lower price than current value), the difference in value is considered the same as if you received any other non-monetary income (i.e, that difference in value is treated the same as a stock grant), in which you would have to pay tax in the current year. Did that about sum it up?