By Michael Gentile & Joe Wallin
Corporations must now comply with an additional reporting requirement with respect to exercises of incentive stock options (nonqualified stock options are not subject to this new requirement). Beginning with ISO exercises occurring in 2010, corporations will have to file an information return with the IRS, in addition to providing a statement to the employee. The IRS has issued Form 3921 for this purpose, which corporations must use to satisfy these reporting requirements.
In general, the information to be provided on Form 3921 includes:
- the date the option was granted and exercised;
- the exercise price per share;
- the fair market value per share on the date of exercise; and
- the number of shares transferred pursuant to exercise of option.
Corporations must file Form 3921 with the IRS by February 28 (or March 31 for electronic filers) of the year following the year in which the ISO is exercised, and furnish a copy to the employee by January 31 of that year. This means that, for ISO stock exercises which occurred in the calendar year 2010, the reporting deadlines is fast approaching. With respect to such exercises, corporations must complete and provide a copy of the form to the employee no later than January 31, 2011, and file the form with the IRS no later than February 28, 2011 (or March 31, 2011 for electronic filers).
You can find more information here.
By Accurate Psychic Readings and the Practice of Mediumship | Angel Dream Guide February 17, 2011 - 3:33 pm
[…] Companies, Remember To Provide IRS Form 3921 To Employees Who … […]
By Jacqueline March 13, 2011 - 11:15 pm
As an employee, if I received this form, do I need to do anything with it on my tax return if I still own the stock?
By Joe Wallin March 13, 2011 - 11:50 pm
Yes. You will need to use it to determine whether you owe the alternative minimum tax. You should consult your tax preparer and share this information with them.
By Fae April 11, 2011 - 4:17 pm
If you do a cashless exercise when exercising ISOs, does the full amount of shares get reported on the 3921 or just the # that you had at the end of the day?
By Anonymous April 11, 2011 - 5:29 pm
Because the holding periods would not be met with respect to the shares given up in the cashless exercise, those would no longer be considered ISO shares.
By Guest March 9, 2012 - 2:27 pm
Are the procedures for late filing of Form3921 the same as those of regular filing (on time)?
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Companies, Remember IRS Form 3921 For Employees Who Exercised ISOs | Startup Law Blog…
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