[davidu]

"but in the US, you only get taxed when you sell the shares. Capital gains would not be recognized if you exercised the options and held onto the shares."

In the US this is a completely false statement.

As the FMV increases of your exercised options, you are responsible for paying taxes at the /time of exercise/ between the strike price and the FMV of that stock.

Once you pay those taxes, you do not need to continue to pay taxes as the FMV increases. The reason you pay at exercise is because you are exercising options that are already "in the money" even though you obviously have not yet realized that actual gain since you didn't sell the stock.

Sucks, but it's the way it is.

[limeyx]

Thats only true for non-qualified options.

ISO's were specifically designed to get around this issue (but you may still get hit w/AMT on the spread)