incentive stock option

incentive stock option
incentive stock option see option 3

Merriam-Webster’s Dictionary of Law. . 1996.

incentive stock option
(ISO)
An option to purchase stock (usually given to senior employees) which provides favorable tax treatment for the option holder, as long as certain holding period requirements are met. If the holding period requirements are met, the options are not taxable at the time they are granted or exercised, and any profit is taxed at long-term capital gains rate instead of ordinary income rates.
Category: Business, LLCs & Corporations
Category: Personal Finance & Retirement

Nolo’s Plain-English Law Dictionary. . 2009.

incentive stock option
USA
incentive stock option, Also known as ISOs.
A type of stock option that can be granted only to employees and can qualify as "statutory stock options" under the Internal Revenue Code (IRC) to receive tax-favorable treatment. If qualified, ISOs are not subject to ordinary income taxes at grant or exercise. Instead, only the profit made on any sale of the underlying shares is taxed, at prevailing long-term capital-gains rates (capital gains tax). Under certain circumstances, the holder of an ISO may also be subject to alternative minimum tax in the year the ISO is exercised.
To qualify, an ISO must satisfy the requirements of Section 422 of the IRC, including a requirement that the ISO be issued pursuant to a qualifying, stockholder-approved plan. In addition, to be entitled to tax-favorable treatment, the holder of an ISO must hold the underlying shares until the later of one year from the date of exercise or two years from the date of grant of the option.
For more information about incentive stock options and other types of stock options and equity compensation, see Practice Note, Stock Options and Other Equity Compensation (www.practicallaw.com/0-501-9297).

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

Игры ⚽ Поможем написать курсовую

Look at other dictionaries:

  • incentive stock option — UK US noun [C] ► STOCK MARKET ISO(Cf. ↑ISO) …   Financial and business terms

  • Incentive stock option — Incentive stock options (ISO s), are a type of employee stock option that can be granted only to employees and confer a U.S. tax benefit. ISO s are also sometimes referred to as incentive share options or Qualified Stock Options.The tax benefit… …   Wikipedia

  • Incentive Stock Option - ISO — A type of employee stock option with a tax benefit, when you exercise, of not having to pay ordinary income tax. Instead, the options are taxed at a capital gains rate. Although ISOs have more favorable tax treatment than non qualified stock… …   Investment dictionary

  • incentive stock option — noun an option granted to corporate executives if the company achieves certain financial goals • Syn: ↑incentive option • Hypernyms: ↑option …   Useful english dictionary

  • incentive stock option — An option granted to an employee of a corporation to purchase stock of such corporation at a specified price for a specified period of time. Generally, there are no tax consequences until such time as the stock is sold …   Black's law dictionary

  • incentive stock option — An option granted to an employee of a corporation to purchase stock of such corporation at a specified price for a specified period of time. Generally, there are no tax consequences until such time as the stock is sold …   Black's law dictionary

  • stock option — see option 3 Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. stock option n. Th …   Law dictionary

  • Stock option expensing — is a method of accounting for the value of share options, distributed as incentives to employees, within the profit and loss reporting of a listed business. It is an accounting standard thought by several Socially Responsible Investors to improve …   Wikipedia

  • Employee stock option — An employee stock option is a call option on the common stock of a company, issued as a form of non cash compensation. Restrictions on the option (such as vesting and limited transferability) attempt to align the holder s interest with those of… …   Wikipedia

  • stock option — an option giving the holder, usually an officer or employee, the right to buy stock of the issuing corporation at a specific price within a stated period. [1940 45] * * * Contractual agreement entitling the holder to buy or sell a share of stock… …   Universalium

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”