What taxes apply when exercising and selling ISOs?
October 31, 2005
Date: Thu, 25 Aug 2005
My husband was awarded some ISOs in 1997. Now we are looking at exercising ISOs and selling shares.
- Do we have to pay Federal or State taxes on this?
- Will the AMT apply?
I believe from all my reading that all we will have to pay is capital gains tax. Is this correct?
Date: Wed, 12 Oct 2005
See our special report, “Executive Tax Planning for Incentive Stock Options“.
The AMT will probably apply if you exercise the options and hold the shares. If the shares are sold before holding period requirements are met, your husband will have ordinary income taxed as additional wages.
Maybe you should consult with a tax advisor to help walk you through this. (Like us.)