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Incentive Stock Options (ISOs) are a form of equity compensation, offering employees a share in the potential appreciation of a company’s value, with preferential tax treatment.

You may have been (or will be) granted ISOs by your employer during your career. Deciding whether and when to exercise ISOs and sell shares can be difficult and requires cash flow analysis, complex tax planning, and a long-term strategy.

This checklist helps guide your decision-making process regarding ISOs. It covers:

  • Issues to consider at grant
  • Implications of exercise, including early exercise and post-vesting
  • Tax considerations and the IRC 83(b) election
  • Share ownership and sale strategies
  • Concentration and other risks