Payroll taxes for contingent exercise of ISOs

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    newacct
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    I exercised and immediately sold ISOs of my company using a Promissory Note, as allowed by the company, contingent upon the closing of the sale of the company. I was under the impression that the exercise of ISOs was not subject to FICA taxes even if there was a disqualifying disposition. However, somebody else is claiming that the contingent nature of the exercise made it equivalent to a cash-out, and it is therefore subject to tax withholding, including FICA taxes. Are they right?

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