GiftLaw Pro, our charitable tax reference service, features detailed information on gift and estate planning strategies. It includes links to relevant Internal Revenue code sections, regulations, rulings, cases and more.

1. Stock options are a popular way that corporations attract and retain key personnel.

True False

2. If someone has a stock option, then it has to be an incentive stock option (ISO).

True False

3. Under an ISO plan, an employee purchases stock options at a discount from the corporation.

True False

4. The option price must not be less than the stock's fair market value at the time the option is granted.

True False

5. Since the corporation granted the option to the employee, the corporation decides when, where and whether or not the employee can exercise his or her option.

True False

6. An employee must exercise an ISO within 15 years of the grant date.

True False

7. After an employee exercises an ISO, he or she is subject to a holding period.

True False

8. Because an ISO is a form of compensation, an employee will be subject to ordinary income tax rates upon the eventual sale of the company stock.

True False

9. An employee must realize income when an ISO is granted to him or her because it is a valuable property right.

True False

10. An employee may transfer an ISO to charity or a planned gift during life.

True False

Basic Quiz - 4.13.1 Incentive Stock Options