What time counts toward the holding period for my incentive stock options?

July 25, 2001

Date:   18 Dec 2000
From:   Jost

I had ISOs granted in June 1996 and exercised them in January 2000, 3.5 years later. Am I still required to keep a holding period of more than one year to qualify for the lower capital gains tax rate or can I now also count the extra 1.5 years in excess of two years between granting and exercise date?


Date:   12 Feb 2001

Hello Jost,

No. There are two separate holding period requirements to be met. You have already met the first one, to hold the stock more than 2 years after the option is granted. Now you have to meet the second one, to hold the stock more than one year after the option is exercised.

Good luck!

Mike Gray

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

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