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Employee stock options outlive owner

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in Small Business Tax

Q. My father, who was a widower, died earlier this year. My sister and I are the beneficiaries of his estate. He left several qualified company stock options unexercized. Are the options still valid? M.J., Sarasota, Fla.

A. Yes. Generally speaking, a qualified stock option— otherwise known as an incentive stock option (ISO)—must be exercised within three months after the employee retires or otherwise leaves the company. But representatives of the estate can qualify for an exception to this rule. Tip: This is a complex area of law, so consult with the estate’s executor and/or your tax pro.

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