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Subject:   Stock Splits
Date:   Wed, 17 Sep 2003
From:   Chris

Mr. Gray,

Does a stock split or a reverse stock split effect incentive stock options at all? For example, if you had an option for 1500 shares granted in 1997 and then the stock split in 2001, would this have an effect on the option?

Answer

Date:   Fri, 03 Oct 2003

Hello Chris,

The option would be adjusted for the split. Using your example, if the original option was granted for 1500 shares at $1 per share and the stock split 2:1, the option would be adjusted to 3000 shares at 50¢ per share.

Good luck!

Mike Gray

For more information about incentive stock options, request our free report, Incentive Stock Options - Executive Tax and Financial Planning Strategies.

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained in this answer was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.