Just like most types of investment
packages, when there is gain, it is
automatically deemed as revenue or
And all types of income are subject to
Tax implications of stock option have to be
paid and the amount that you need to pay
will depend on a number of factors
including the classification of stock options
you have and the tax rules governing these
For those who are not aware yet, the two
basic types of stock options and they are
the incentive stock option or ISO and NSO.
The former is given privileged tax treatments
and it should follow certain conditions set
by the government tax agency.
With incentive stock options, employees are
not forced to pay taxes on their stock until
the shares are sold.
In the event that the stock is sold, capital gains taxes are
required to be paid and they are computed against the
Gains earned is determined by getting the difference
between the selling price and the purchase price.
This tax rate on stock options is usually lower than traditional
income tax rates.