There are situations in which this won't be the case, however.
The first and last are the most favorable; the middle three are the least favorable. Sell shares less than a year after you purchased them. You exercise the option to purchase the shares, then you sell them more than a year after the day you purchased them.
If you disqualify your options in the same calendar year as the exercise, the preference amount no longer applies to the disqualified shares. There are situations in which this won't be the case, however. In this situation, you exercise your option to purchase the shares but you do not sell the shares. Exercise your option to purchase the shares, then sell the shares the same day or within the same year. The price break is the bargain in the transaction, so it is often known as the bargain element.