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@smurthys @mattly What you say is essentially true: one part is taxed as wages, and one part as capital gains (long or short).

The complexity comes from where the dividing line is drawn - it depends on both the period of time from grant to exercise, and exercise to sell... I don't pretend to understand the rational for the several different cases.. but you can find decent references (and flowcharts!) on-line to help you wade through it.