I had employee Incentive Stock Options (ISO) in a
Startup company and I exercised them in April, 2007.
The exercise price was $0.01 per share. The grant
Date is Sept, 2004. Since the company is not publicly
Traded, I don't know the price per share at the time
When I exercised my options. I have two questions:

1. How is the price decided for tax purposes for a
(private) compnay like this one.
2. Do I need to pay taxes even before I sell my
Shares?

1) Your company needs to tell you what the price per share was.

2) You need to pay both income and FICA taxes on the money you received when you exercised the option then sold the stock. If you HOLD the stock and sell it later, then you pay capital gains taxes.