- 15 - (if sustained) would be recognized to such individual, the amount includable in the taxpayer’s gross income shall not exceed the excess (if any) of the amount realized on such sale or exchange over the adjusted basis of such shares. Section 422(d) imposes an annual limit on options that qualify as ISOs. Section 422(d) provides: SEC. 422(d). $100,000 Per Year Limitation.-- (1) In general.--To the extent that the aggregate fair market value of stock with respect to which incentive stock options (determined without regard to this subsection) are exercisable for the 1st time by any individual during any calendar year (under all plans of the individual’s employer corporation and its parent and subsidiary corporations) exceeds $100,000, such options shall be treated as options which are not incentive stock options. (2) Ordering rule.--Paragraph (1) shall be applied by taking options into account in the order in which they were granted. (3) Determination of fair market value.--For purposes of paragraph (1), the fair market value of any stock shall be determined as of the time the option with respect to such stock is granted. In sum, when the aggregate fair market value of stock that a taxpayer may acquire pursuant to ISOs that are exercisable for the first time during any taxable year exceeds $100,000, such options shall be treated as nonqualified stock options (NSOs) under section 83 (as discussed in detail below).Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Next
Last modified: May 25, 2011