I think the parent poster is saying that this tax treatment of options is inconsistent with the way RSUs are taxed, though. RSUs are taxed at vest time even if

I think the parent poster is saying that this tax treatment of options is inconsistent with the way RSUs are taxed, though. RSUs are taxed at vest time even if you hold the shares, presumably because they can be sold immediately since they have some FMV. Options are not taxed at vest time, even if they are ITM and have some large positive FMV. And for ISOs, even if you exercise immediately at vest and you don't sell the exercised shares, there is no tax (assuming no AMT). What is the reason for the different tax treatment?