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1. There never is any tax consequence to an employee when a non-qualified stock option (NSO) is granted.

True False

2. An employee may elect to report income at the time a NSO is granted.

True False

3. Similar to an ISO, there is no taxable event when an employee exercises his or her NSO.

True False

4. An employee will realize capital gain income upon exercise of an NSO.

True False

5. Once an employee exercises an NSO, an employee must hold the company stock for a minimum of one year.

True False

6. The tax code prohibits the lifetime transfer of NSOs.

True False

7. Stock options are a popular way that corporations attract and retain key personnel.

True False

8. If someone has a stock option, then it has to be an incentive stock option (ISO).

True False

9. Since the corporation granted the option to the employee, the corporation decides when, where and whether or not the employee can exercise his or her option.

True False

10. An employee must always realize income when a NSO is granted to him or her because it is a valuable property right.

True False

Basic Quiz - 4.13.2 Non-Qualified Stock Options