As seen in Philadelphia Business Journal
A: The amount of tax you’ll pay on Incentive Stock Options (ISO) depends on various dates and values. The date you purchase the shares (exercise date) at an agreed upon price (strike price), does not trigger regular federal income tax. However, the difference between the stocks fair market value and the strike price is included in the calculation of your alternative minimum tax. If the stock is sold more than one year after the exercise date, you’ll pay long term capital gains tax on the difference between the selling price and the cost of the option.
For questions on ISOs or general tax guidance, contact Mark A. Nicastro, Partner at Friedman LLP at firstname.lastname@example.org.