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Anonymous Audit

Can you extend the life of an ISO plan past 10 years?

Asked on April 5, 2016

Hi Everyone - What are the tax implications if options in an ISO plan are given a longer than 10 year life? I assume the plan therefore changes from an ISO to an non-qualified plan. (I assume there are no GAAP implications unless the decision is made to cancel and re-grant options under a new ISO plan). I've never seen this issue before, any insights appreciated - it's primarily a tax question - thanks

Answers

Lyle Newkirk CFO • April 6, 2016

I am pretty sure that you cannot do this legally. You should ask counsel but I think it is a requirement that ISOs expire in ten years.
You could grant new ISOs upon expiration of the old ones and those would carry the same accounting treatment as other new ISOs.

D R Audit • April 6, 2016

thanks Lyle, I'm pretty sure you're correct. has to be 10 years to be an ISO plan. thanks for your response, I think this more of a legal question than accounting.

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