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Lesson 5. Incentive Stock Options > The 30-Second Recap - Pg. 26

Incentive Stock Options 26 The AMT situation requires specific guidance from a tax professional. You should consult your tax counselor before exercising an ISO or selling any stock. The 30-Second Recap · · · · Incentive stock options are especially valuable in recruiting and retaining highly paid executives. Employees must meet specific holding period rules for ISOs to receive tax-favored treatment. Your profits from stock bought with ISOs are taxed at favorable long-term capital gains rates. Gains realized by ISOs that do not meet tax code requirements are taxed at ordinary income tax rates.