--- title: Incentive Stock Options (ISOs) in Scenario Analysis description: Entering Incentive Stock Options in Scenario Analysis --- [Skip to content](https://help.holistiplan.com/how-to-i-enter-isos-in-scenario-analysis#main-content) English Show submenu for translations [More support](https://help.holistiplan.com/kb-tickets/new?hsLang=en) [![Holistiplan Logo (800x200 px).webp\]](https://help.holistiplan.com/hs-fs/hubfs/Holistiplan%20Logo%20(800x200%20px).webp?width=160&height=40&name=Holistiplan%20Logo%20(800x200%20px).webp)](https://www.holistiplan.com/) Open main navigation Close main navigation - English Show submenu for translations - [More support](https://help.holistiplan.com/kb-tickets/new) Holistiplan Knowledge Base - There are no suggestions because the search field is empty. 1. [Help Center](https://help.holistiplan.com/?hsLang=en) 2. [Scenario Analysis](https://help.holistiplan.com/scenario-analysis?hsLang=en) 3. [Equity Compensation](https://help.holistiplan.com/scenario-analysis?hsLang=en#equity-compensation) # Incentive Stock Options (ISOs) in Scenario Analysis Under the regular tax calculation, exercising Incentive Stock Options (ISOs) is not a taxable event. This is different than the exercise of Non-qualified stock options (NQSOs), where any increase between the grant price and the market price at exercise (also known as the "bargain element" or the "spread") is considered ordinary income.  For Alternative Minimum Tax (AMT) purposes, however, the difference in the exercise price and the fair market value of the stock at the time of exercise for a qualified ISO exercise is considered a preference item, meaning that the amount gets added back when determining the amount of taxable income for AMT purposes. This discount element needs to be entered in **line 2i** of the **AMT** section in Scenario Analysis. ![](https://help.holistiplan.com/hs-fs/hubfs/Screenshot%202026-02-05%20at%2010-59-53%E2%80%AFPM-png.png?width=523&height=553&name=Screenshot%202026-02-05%20at%2010-59-53%E2%80%AFPM-png.png) Assuming that the rules for a qualifying disposition have been met, the *sale* of any shares obtained through an ISO exercise would be eligible for long-term capital gains treatment and should be included with any other gains for the year the **Schedule D** section. Long-term capital gains also receive preferential tax treatment for AMT purposes. But in the case of shares obtained through ISO exercise, the *cost basis* for AMT purposes will be different compared to the regular tax calculation. In the regular tax calculation, cost basis will equal the amount paid for the shares (i.e., the number of shares obtained multiplied by the strike price). **For AMT purposes, the cost basis is equal to the cost of the shares *plus* the bargain element of the exercise**, resulting in a higher cost basis. In other words, the same sale will have different amounts of net capital gains under the standard tax calculation and the AMT tax calculation. Accordingly, users will want to calculate and enter the gains separately for both systems and enter them in the appropriate sections in the **Capital Gains worksheet**: the **Regular** column for the capital gains under the standard system and the **AMT** column for the adjusted gains. ![](https://help.holistiplan.com/hs-fs/hubfs/Screenshot%202026-02-05%20at%2011-01-53%E2%80%AFPM-png.png?width=611&height=340&name=Screenshot%202026-02-05%20at%2011-01-53%E2%80%AFPM-png.png) To account for this - and to get an accurate calculation of AMT - enter the difference in gains between the two systems as a *negative adjustment* in **Row 2k (Disposition of Property)** of the **Alternative Minimum Tax (AMT)** section. Failing to enter this adjustment will result in an inaccurate amount of AMT. Be sure, however, to only enter the adjustment for gains that are *different* between the two systems. If gains are the same for both the standard and the AMT system, then no adjustment is necessary. ![](https://help.holistiplan.com/hs-fs/hubfs/Screenshot%202026-02-05%20at%2011-11-03%E2%80%AFPM-png.png?width=414&height=448&name=Screenshot%202026-02-05%20at%2011-11-03%E2%80%AFPM-png.png) Our article and webinar below on modeling not just ISOs, but other forms of equity compensation, may be a helpful resource as well. 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