A Major Disadvantage of a NQSO Is That an Employee

question 16

True/False

A major disadvantage of a NQSO is that an employee must recognize ordinary income on the exercise of the option or at the date of the grant without receiving cash to pay the tax.

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Definitions:

Matched by Employer

Pertains to contributions or payments, typically toward FICA taxes or retirement funds, that an employer duplicates for an employee.

Contingent Liability

A potential financial obligation that may occur or become payable in the future, depending on the outcome of a specific event.

Reasonably Possible

A term used in accounting and law to describe a situation or outcome that, while not certain, is more than a remote possibility.

Estimable

Capable of being estimated or appraised, often used in finance and accounting to describe assets or liabilities that can be accurately assessed.