If your employee stock option is granted under an incentive stock option plan or employee stock
purchase plan, you generally do not include any amount in your taxable income
on your tax return as a result of
the grant or exercise of your employee stock option. However, the employee
stock option spread may be subject to
Alternative Minimum Tax
on your tax return. You generally report taxable income or loss
on your tax return when you sell the stock that
you purchased by exercising the employee stock option. However, under an incentive stock option plan,
if the fair market value of the stock for which the stock options may be exercised in a
particular tax year is greater than $100,000 on the date of the grant the excess above
$100,000 is taxable on your tax return.
Non qualified stock options may or may not result in taxable income in the
tax year received
on your tax return.
Special tax rules apply to holding periods and the
tax treatment of capital gains
on your tax return on the sale of the
stock.
Incentive stock options and employee stock purchase plans have tricky
tax rules and you
should consult a CPA, Enrolled Agent, Tax Attorney or other tax advisor.
Investment Income and Expenses, and
IRS 
