Effect of Acquisition of Employer During 1 Year ISO Holding Period on Employee Discusssed

The treatment of incentive stock options that have been exercised when the employer is acquired during the one year period following exercise of the options is discussed in Chief Counsel Advice 201519031.  The key issue is whether the transfer of the shares in the employer for interests in the acquiring company will constitute a disqualifying disposition.  And, as with all good tax questions, the answer is “it depends.”

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