Non-Qualified Stock Options (“Non Quals” or “NQSOs”)

Non-Qualified Stock Options (NQSO) is the opposite of an ISO or Incentive Stock Options. NQSOs can be granted to employees, contractors, and advisors, but have a favorable tax treatment than ISOs. A holder of an NQSO does not recognize any income on the grant of the NQSO, but instead recognizes ordinary income equal to the difference of the exercise price and the fair market value, on the date the option holder exercises the NQSO and again as capital gains, when the option holder sells the stock.

Previous: National Venture Capitalist Association Next: Option Refresh