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The technical requirement of the rule is that the stock is (a) subject to a substantial risk of forfeiture, and (b) not transferable. Some stock option plans h
by jzieger2 13y ago
The technical requirement of the rule is that the stock is (a) subject to a substantial risk of forfeiture, and (b) not transferable. Some stock option plans have an early exercise provision, which, if used, has the effect of converting the option to stock, but subject to restrictions that meet the requirements of Sec. 83(b). Stock options that are subject to an early exercise provision would no longer qualify for ISO treatment.
- hundt 13y ago"Stock options that are subject to an early exercise provision would no longer qualify for ISO treatment." Not sure exactly what you mean by this, but I believe the same ISO rules apply if you exercise early: you don't owe taxes (under the normal income tax calculation; AMT is different for ISOs) until you actually sell the shares.