What is the tax rate for long term capital gains on incentive stock options?
August 20, 1999
Date: Wed, 18 Aug 1999
What is the tax rate for long term capital gains on incentive stock options if the stock is sold,
- One year after exercising the stock
- Before two years after the grant
I understand that the difference between the Fair market value on the date of exercise and exercise price is considered ordinary income. What is the tax rate on the rest of the income (Long term capital gain). I heard it is 20% (from 1998 onwards). Is it true?
Thanks in advance.
Yes. If stock acquired using an ISO is sold more than one year after exercising the option and less than two years after grant, the gain up to the amount of the spread at exercise is ordinary income and the excess is long-term capital gain, eligible for the 20% maximum tax rate.