In [Reg-103146-08] , the IRS said that with respect to a transfer of stock upon the exercise of an incentive stock option, the information required to be furnished to employees under existing regulations is sufficient to enable the employee to calculate his or her tax obligations upon disposition of the shares. Therefore, the information required in the information return and employee statement by the proposed regulations is generally the same as current requirements.
However, with respect to an employee’s transfer of stock acquired under an employee stock purchase plan, the information required to be furnished by existing regulations is not sufficient to enable the employee to calculate his or her tax obligations upon disposition of the shares, the agency said. In the proposal, additional information that would be required for the information return and the statement furnished to employees is:
- The date the option was granted to the transferor;
- The fair market value of the stock on the date the option was granted;
- The exercise price per share;
- The date the option was exercised by the transferor; and
- The fair market value of the stock on the date the option was exercised by the transferor.
According to the IRS, this additional information, along with the information required under the existing regulations, will enable an employee to determine his or her tax obligations upon the disposition of shares.
Returns as well as information statements to employees must be submitted by corporations by January 31 of the year following the calendar year for which the return is made. The proposed regulations would apply to any stock transfer occurring on or after January 1, 2007.
The IRS said it expects to release forms to facilitate the filing of these returns later this year.
The agency is requesting comments on the proposed rules by October 15. Methods for submitting comments are listed in the regulation.