Our First Book Learn how to get the most from your stock options or other equity compensation. This page explains how to determine your initial basis and holding period when you acquire stock in connection with the exercise of an option. These options are discussed in more detail in our Guide to Compensation in Stock and Options and in our book, Consider Your Options . Options you buy or sell through a broker. Options You Receive for Services One way to acquire stock is by exercising an option you received for services.
Many companies provide options to executives and other key employees.
Some companies grant options to all employees. A company may also grant options to people who are not employees, such as consultants and outside directors. See ISOs and NQOs . These two types of options have different tax rules. So your first step to learning your basis in the stock you bought is to know which type of option you exercised.