[ɪnˈsɛntɪv stɒk ˈɒpʃᵊn]
An Incentive Stock Option offers employees the right to buy company stock at a discounted price to reward them. They can have great tax benefits.
An Incentive Stock Option is a type of stock option that is offered to Employees to reward loyalty and performance. The stock option gives the holder the right to buy company stock at a discounted price.
They typically come with certain restrictions such as a a minimum period before the holder is allowed to sell. This is called a vesting period.
Incentive Stock Options are popular as they have great tax benefits when compared with regular stock options. Holders do not have to pay any tax on them when they are first bought and are only finally taxed when you sell them for a profit and there is potential that Capital Gains tax is owed.
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