FAQs: Incentive Stock Option

1. The sale of stock that I purchased using an incentive stock option produced ordinary income.  How do I report that income?

Generally, the sale of stock would produce a capital gain or loss.  However, in some situations, the sale of stock acquired through an incentive stock option may produce ordinary income as well.

In these cases, report the exact amount of ordinary income in the “Income Amount” field.  Describe the income in the “Income Type” field as “option exercise, ordinary income.”