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.

Question

Quizplus · Accepted Answer

This is true. When an employee exercises a non-qualified stock option (NQSO), they must recognize ordinary income, but they do not receive any cash to pay the associated tax, which can create a financial burden.

A Major Disadvantage of a NQSO Is That an Employee