Federal Statutory Stock Option (Qualified Stock Option)

Applicable Option Date Federal Statutory Stock Option Also Called Incentive Stock Option and Qualified Stock Option Pennsylvania Federal Treatment Employee Federal Treatment Employer Pennsylvania Personal Income Tax Treatment Employee Pennsylvania Personal Income Tax Treatment Employer Grant Date No tax impact No tax impact No tax impact No tax impact Exercise Date Alternative minimum tax adjustment equal to the difference between exercise price of stock and fair market value of stock on exercise date No tax impact The value of the option less any amount paid for the option will be taxed as compensation Compensation deduction equal to income withheld as Pennsylvania wages Lapse Date No tax impact No tax impact No tax impact No tax impact Stock Disposition Date Capital gain equal to difference between sale price of stock and exercise price of option. No tax impact Gain or loss on the sale of the stock is the difference between the sale price and the taxpayer's basis in the stock which equals the exercise price of the option plus any compensation recognized as a result of exercising the option No tax impact