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An option to purchase stock that is untaxed when granted or exercised under Sections 421 and 422. Gains from the stock option are only taxed when they are sold, at a capital gains rate. However, when these options are exercised, the difference between the purchase price and the stock's fair market value is a tax preference for AMT purposes.
Synonyms: incentive stock options, qualified stock option, qualified stock options
Synonyms list (a comma-separated list)
incentive stock options, qualified stock option, qualified stock options