Cost basis of incentive stock options
This avoids any tax liability on the unrealized appreciation in the old shares, until the stock is ultimately sold. The following are general points which reflect portions of the collaborative process I typically use with clients to evaluate, strategize and negotiate an optimal set of employment and compensation terms: This is measured by the options' fair market value on the grant date. The requirement that must be met in order to have the right to exercise the option-usually continuation of service for a specific period of time or the meeting of a performance goal.