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 individuals have been (or will be) granted ISOs by their employer during their career. 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 your decisions regarding your 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
