The companies or individuals, who like to take NRIpress.com to the next level, two stock options are available:

Incentive Stock Options (ISO):

• ISOs can only be granted to employee
• For ISOs, the benefit flows to the employee — the employee need not pay income taxes on ISOs; instead, assuming the employee holds the options and the stock for the requisite minimum period and meets other conditions,
• The employee is only taxed on the difference between the exercise price and the fair market value at the time of exercise at the long-term capital gains rate (which is lower than the income tax rate).

• Independent contractors must receive non-qualified stock options (NQOs).
• The holders of NQOs must include the value in their income (and must also pay the capital gains tax upon exercise); however, the issuer (employer) may deduct from its own taxes the amount that the option holder must declare in his or her income.

--ISOs and NQOs are IRS classifications, each of which has tax benefits flowing to a different party.