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subsequent disqualifying disposition during the same taxable year
in which the shares were acquired. We disagree.
Section 422(b), summarized supra note 7, sets forth the
definition of the term “incentive stock option”. Section 422(b)
does not impose a holding period requirement on shares of stock
acquired pursuant to the exercise of an ISO, nor does it cross-
reference section 422(a)(1) or otherwise exclude shares which are
later subject to disqualifying dispositions. Equally important,
although section 422(a) provides the general rule that section
421(a) shall apply with respect to the transfer of a share of
stock to an individual pursuant to an exercise of an ISO if,
among other requirements, certain holding periods are satisfied
under section 422(a)(1), section 422(a) does not state that a
violation of the holding period requirement will cause the option
to fail to qualify as an ISO. Along the same lines, although
section 421(b) describes the tax effects if a taxpayer receives
shares of stock pursuant to the exercise of an option which would
meet the requirements of section 422(a), except for a failure to
meet any of the holding period requirements of section 422(a)(1),
section 421(b) does not state that the option is not to be
considered an ISO. In contrast, section 422(d) unambiguously
states that options exceeding the $100,000 limitation “shall be
treated as options which are not incentive stock options.”
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