Why do employees prefer ISOs to NQOs Multiple choice question A Employees who sell stock that was purchased with NQOs will recognize ordinary income on the entire realized gain regardless of holding period BEmployees who meet the required holding period for ISOs will treat the difference between the sales proceeds and exercise price as a longterm capital gain The bargain element is NOT taxed for ISOs which results in a lower gain to the employee when the stock is sold ISOs result in gains that are exempt from taxation in the year the employee disposes of the stock