Incentive Stock Options (ISOs) are a form of equity compensation, offering employees a share in the potential appreciation of a company’s value, with preferential tax treatment. Many of our clients have been (or will be) granted ISOs by their employers during their careers. Deciding whether and when to exercise ISOs and sell shares can be difficult and requires cash flow analysis, complex tax planning, and a long-term strategy. This checklist helps guide our conversations when advising clients regarding their ISOs. It covers:
Issues to consider at grant
Implications of exercise, including early exercise and post-vesting
Tax considerations and the IRC §83(b) election
Share ownership and sale strategies
Concentration and other risks
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