Emerging Enterprise Center Blog - Commentary and Analysis For Entrepreneurs and Startups

Everyone wants “incentive stock options” (as such term is defined in the Internal Revenue Code) as opposed to non-qualified options, because of the potential to capture capital gains tax treatment after the exercise of the incentive stock options and the eventual sale of the underlying stock. The option holder hopes to pay capital gains tax (as opposed to income tax) on the difference between the exercise price of the option and the price at which the underlying stock is eventually sold. So, if you have options to purchase 100,000 shares the Mighty Software Corporation with an exercise price of $.20 per share... More