Incentive Stock Options (ISOs) are a form of equity compensation, offering employees a share in the potential appreciation of a company’s value, with preferential tax treatment. Many clients have been (or will be) granted ISOs by their employer during their career. Deciding whether and when to exercise ISOs and sell shares can be difficult and requires cash flow analysis, complex tax planning, and a long-term strategy.
This checklist helps guide you regarding ISOs. It covers:
Issues to consider at grant
Implications of exercise, including early exercise and post-vesting
Tax considerations and the IRC §83(b) election
Share ownership and sale strategies
Concentration and other risks