Special Reporting Requirements For Incentive Stock Options – 2018 Update

Special Reporting Requirements Regarding Exercises of Incentive Stock Options and Transfers of Stock Acquired Under Employee Stock Purchase Plans (2018 Update)

Section 6039 of the Internal Revenue Code of 1986, as amended (the "Code"), imposes reporting requirements on each corporation with respect to (i) the transfer by the corporation of stock due to the exercise of an incentive stock option ("ISO") and (ii) the initial transfer of stock that was previously acquired pursuant to an employee stock purchase plan ("ESPP"). Specifically, Section 6039(a) of the Code requires each corporation to file information returns relating to such exercises and transfers with the Internal Revenue Service (the "IRS"), and Section 6039(b) of the Code requires each corporation to furnish the same information to each employee exercising an ISO or making an initial transfer of stock acquired under an ESPP.