Your Ask Joey ™ Answer

What are incentive stock options (ISO’s)?

Incentive stock options (ISOs) are types of employee-based compensation that is distributed in the form of stock. Incentive stock options (ISO) enable the employer to grant the employee an option to purchase stock in the employer’s corporation, or parent or subsidiary corporations, at a predetermined price, called the exercise price or strike price.

The employee will generally be able to purchase the option at its strike price once the option is available to be exercised (vested). Income from incentive-based stock options will generally be subject to both regular income tax and alternative minimum tax.

Incentive based stock options are available to be calculated if they have all of the following information:

Back To All Questions

You might also be interested in...

  • Discontinued Operations on the FAR CPA Exam

    Overview of Discontinued Operations In financial reporting, discontinued operations refer to a component of a company’s core business or product line that have been divested or shut down. Discontinued operations will be reported (net of tax) separately from continuing operations on the income statement. The reason that discontinued operations are reported separately is so that...

  • Equity Method Excel Workbook

    If you would like to use the Excel workbook that was used to create the Universal CPA lecture on the equity method, please click the link below to download the Excel workbook: Equity Method Lecture Example

  • How Hard is the CPA Exam?

    So you’re thinking about taking the CPA exam? Whether you have a dream of becoming a tax advisor, feel as though you need public accounting experience, or just want to solidify your business acumen, the CPA license is one of the most prestigious and well respected licenses in the business world. The exam itself is...