# Incentive stock option

> Incentive stock option — A stock option meeting IRC §422: employees only, granted under a stockholder-approved plan, strike at least fair market value, exercisable for no more than ten years. No regular tax at grant or exercise (the spread can trigger AMT); gain is capital if the stock is held two years from grant and one from exercise. Only $100,000 of stock, valued at grant, may first become exercisable in a calendar year.

Source: https://lopifi.com/glossary/incentive-stock-option
Part of: Lopifi — US GAAP books on autopilot, checked by a CPA (https://lopifi.com)

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**What is incentive stock option?** In accounting, incentive stock option means a stock option meeting IRC §422: employees only, granted under a stockholder-approved plan, strike at least fair market value, exercisable for no more than ten years. No regular tax at grant or exercise (the spread can trigger AMT); gain is capital if the stock is held two years from grant and one from exercise. Only $100,000 of stock, valued at grant, may first become exercisable in a calendar year.

## Also known as

- ISO

## Words this system refuses for it

- NSO
- RSU

- **Category:** Equity & financing
- **Specified in:** [Lexicon](https://lopifi.com/md/docs/domain/11-lexicon)
- **Rendered by:** [currency-badge](https://lopifi.com/md/components/currency-badge), [money](https://lopifi.com/md/components/money), [payment-method-card](https://lopifi.com/md/components/payment-method-card)