Company: XTIA
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001213900-25-032213
Chunk: 221

Company: XTI Aerospace, Inc.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 1
Chunk 221
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, state or foreign jurisdiction in which a participant may reside or the rules applicable to deferred
compensation under Section 409A of the Code. Our ability to realize the benefit of any tax deductions described below depends on
our generation of taxable income as well as the requirement of reasonableness, the provisions of Section 162(m) of the Code
and the satisfaction of our tax reporting obligations.

From
the grantees’ standpoint, as a general rule, ordinary income will be recognized at the time of delivery of shares of our Common
Stock or payment of cash under the 2018 Plan. Future appreciation on shares of our Common Stock held beyond the ordinary income recognition
event will be taxable as capital gain when the shares of our Common Stock are sold. The tax rate applicable to capital gain will depend
upon how long the grantee holds the shares. We, as a general rule, will be entitled to a tax deduction that corresponds in time and amount
to the ordinary income recognized by the grantee, and we will not be entitled to any tax deduction with respect to capital gain income
recognized by the grantee.

68

Exceptions
to these general rules arise under the following circumstances:

    ●
    If shares of our Common Stock, when delivered, are subject to a substantial
risk of forfeiture by reason of any employment or performance-related condition, ordinary income taxation and our tax deduction will be
delayed until the risk of forfeiture lapses, unless the grantee makes a special election to accelerate taxation under section 83(b) of
the Code.

    ●
    If an employee exercises a stock option that qualifies as an ISO, no
ordinary income will be recognized, and we will not be entitled to any tax deduction, if shares of our Common Stock acquired upon exercise
of the stock option are held until the later of (A) one year from the date of exercise and (B) two years from the date
of grant. However, if the employee disposes of the shares acquired upon exercise of an ISO before satisfying both holding period requirements,
the employee will recognize ordinary income at the time of the disposition equal to the difference between the fair market value of the
shares on the date of exercise (or the amount realized on the disposition, if less) and the exercise price, and we will be entitled to
a tax deduction in that amount. The gain, if any, in excess of the amount recognized as ordinary income will be long-term or short-term
capital gain, depending