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Equity Compensation 101
By Gary T. Moyer, April 11, 2000
NQSO - Tax Treatment
- No income recognized on grant of the option (assuming option itself has no "readily ascertainable FMV")
- Employee has wage income (and Company has deduction) on employees exercise of the option
- Income/deduction is the difference between the stock’s FMV and the exercise price
- Employee generally has capital gain upon later sale of the stock
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