I have a question and I hope someone can provide some insight. My wife has options from her company, and she is going to exercise them. Now, she can exercise and sell the stock, or exercise and hold the common in the account. If she exercises and holds the common, does she still have to pay the tax on the options - or does she just pay tax when she sales the common? For example - the options are 11 and the stock is at 15. She exercises and holds the common. Does she pay tax on the unrealized gain from the option exercise? If so, does she also pay when she sells the common (provided there is a gain)? I am confused about the taxing situtation - any clarification is apprecated.