What is the benefit to the company when issuing non-qualified stock options over incentive stock options?
February 16, 2000
Date: Tue, 1 Feb 2000
What is the benefit to the company when issuing non-qualified stock options over ISO type options?
Date: 9 Feb 2000
When a company issues incentive stock options, it will only get a tax deduction if the employee doesn’t meet the requirements for reporting the income from selling the stock received from exercising the option as a long-term capital gain. Usually this happens because the employee hasn’t held the stock for more than two years from the grant date and one year from the exercise date.
When a company issues non-qualified stock options, it will get a tax deduction whenever the employee has ordinary income from exercising the option. The employee will report ordinary income whenever the fair market value of the stock received exceeds the option price for the stock.