Reporting Deadlines Approaching for Incentive Stock Option and Employee Stock Purchase Plans

Under Section 6039 of the Internal Revenue Code, corporations are required to furnish statements to current and former employees who exercised an incentive stock option in 2013 or first transferred legal title to shares acquired as part of the corporation’s 423 employee stock purchase plan in 2012. These statements must be furnished on Forms 3921 and 3922 no later than January 31, 2014.

Corporations must all also file returns with the IRS on Forms 3921 and 3922 no later than February 28, 2014.

Form 3921 is for ISO exercises and provides

the following information:

• The name, address and employer identification number of the corporation transferring the shares
• The name, address and employer identification number of the corporation whose stock is subject to the option (if other than the corporation transferring the shares)

• The name, address and identifying number of the person to whom the shares were transferred
• The date when the option was granted
• The exercise price per share
• The date when the option was exercised
• The fair market value of a share on the date when the option was exercised, and
• The number of shares transferred

Form 3922 is for the transfer of employee stock purchase plan shares and provides the following information:

• The name, address and employer identification number of the corporation whose stock was transferred
• The name, address and identifying number of the transferor (i.e., the employee who acquired the shares under the ESPP)
• The date when the option was granted to the transferor
• The fair market value of a share of stock on the date the option was granted
• The actual exercise price paid per share
• The exercise price per share determined as if the option was exercised on the date the option was granted (to be provided only if the exercise price per share is not fixed and determinable on the date of grant)
• The date when the option was exercised
• The fair market value of a share of stock on the date the option was exercised
• The date when the legal title to the shares was transferred by the transferor, and
• The number of shares to which title was transferred by the transferor.

Penalties will result if Forms 3921/3922 are not furnished to the affected employees (current or former) and Internal Revenue Service on a timely basis.

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