By
Kathleen Stephenson
and Lisa Petkun
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Taxing the NQSO
As upon the grant of an ISO, an employee does not recognize income upon the grant of a NQSO. However, when the NQSO is exercised, the employee will recognize ordinary income equal to the difference between the fair market value of the stock when the NQSO is exercised over the strike price.
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Kathleen Stephenson
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Lisa Petkun
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