List and discuss the qualification requirements for an incentive stock option plan (ISO). Describe the advantages and disadvantages of ISOs compared to nonqualified stock option plans.

Select the employer qualification requirements for an incentive stock option plan (ISO). (Select all that apply.)

A. The employee cannot own more than 10% of the voting power of the employer corporation's stock immediately before the option's grant date.

B. The option must be granted within ten years of the date the plan is adopted, and the employee must exercise the option within ten years of the grant date.

C. Distributions from the plan to recipients are subject to strict rules.

D. The option must be both exercisable only by the employee and nontransferable except in the event of death.

E. The option price must be equal to or greater than the stock's FMV on the option's grant date.

F. The employee cannot own more than 25% of the voting power of the employer corporation's stock immediately before the option's grant date.

G. The total FMV of the stock options that become exercisable to an employee in any given year may not exceed $100,000 (e.g., an employee can be granted ISOs to acquire $200,000 of stock in one year, provided that no more than $100,000 is exercisable in any given year).

H. The option price must be equal to or less than the stock's FMV on the option's grant date.

I. A definite, predetermined formula must be used to allocate employer contributions to individual employees and to establish benefit payments.

J. Other procedural requirements must be met (e.g., shareholder approval of the plan).