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Incentive Stock Option (ISO)

Definition: [crh] An Option that has met certain tax requirements entitling the optionee to favorable tax treatment. Such an option is free from regular tax at the date of grant and theDefinition: date of exercise (when a non-qualified option would become taxable). If two holding period tests are met (two years between grant date and Definition: REF="/?rd=sale">sale date and one year between the exercise date and sale date), the profit on the option qualifies as a long term capital gain rDefinition: ather than ordinary income. If the holding periods are not met, there has been a "disqualifying disposition".

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