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ARTICLE · 27 JANUARY 2014

Annual ISO And ESPP Information And Reporting Requirements

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For any exercise of an incentive stock option or transfer of a share previously purchased pursuant to a tax-qualified employee stock purchase plan where the purchase price paid for the share was (a) less than 100% of the fair market value on the date of grant or (b) not fixed or determinable on the date of grant, the Internal Revenue Code requires companies.

United StatesTax
Christine McCarthy
Christine McCarthy
Michael Yang
Michael Yang
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Annual Information Statements and IRS Returns

Requirement to Report

For any exercise of an incentive stock option (ISO) or transfer of a share previously purchased pursuant to a tax-qualified employee stock purchase plan (ESPP) where the purchase price paid for the share was (a) less than 100% of the fair market value on the date of grant or (b) not fixed or determinable on the date of grant, the Internal Revenue Code requires companies to:

  • furnish, by January 31, 2014, annual information statements to the participant who exercised the ISO or transferred the ESPP share; and
  • file, by February 28, 2014 (for paper filers) or by March 31, 2014 (for electronic filers), an information return with the IRS (please note that companies may request an automatic 30-day extension of this deadline by filing a Form 8809, Application for Automatic Extension of Time to File Information Returns, with the IRS on or before the applicable filing deadline).  

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