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Incentive stock options (ISOs)

The option type with the best tax treatment and the worst surprise: the alternative minimum tax. How exercising works, when the AMT hits, and how to plan the year.

Rules & mechanics

How the grant actually works, step by step.

In-depth Start here

How ISOs work

Incentive stock options can turn your entire gain into long-term capital gains, no ordinary income at all. The path is narrow, every step has a deadline, and this is the whole map from grant to sale.

Taxation

What is taxed, and when, from grant to vest to exercise to sale.

Guide Start here

How ISOs are taxed at exercise and sale

ISOs skip ordinary tax at exercise, but the disposition decides everything: clear both holding clocks and the whole gain is long-term capital gains, miss either and the spread becomes ordinary income.

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ISOs and the AMT: the complete guide

Exercising and holding ISOs can hand you a cash tax bill on a gain you never sold, and this is the whole story of how that happens and how to plan around it.

Strategies

The decisions and frameworks that move the most money.

Guide Start here

Planning the ISO exercise year

Exercise up to the point where AMT kicks in, early in the year, then stop and repeat. The whole strategy is choosing how much spread to recognize, when to hold, and when to sell, on purpose.

Forms & reporting

The tax forms, the reporting, and worked examples.

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Form 3921 and Form 6251 for ISOs

One form your employer mails you, one form where the AMT shows up, and one form where the sale gets reported three different ways. Get them aligned and the ISO surprise loses its power.

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