The bill (HR 4972) was just introduced by House Ways and Means Committee member Amo Houghton (R-NY) in an attempt to encourage a broader participation in employee stock option plans.
The proposal would allow employees to contribute up to $10,000 a year to a stock option plan, deferring tax until the stock is sold. The contribution basis would be taxed at ordinary income rates, excess gain as a capital gain, according to BNA’s Pension and Benefits Daily.
The employer would receive a deduction for the value of the stock when the option is exercised.
“The deferral aspect would provide a powerful incentive to the employee to hold the stock for a longer term,” Houghton said in an introductory statement. “Importantly, the employee pays for the stock, through payroll deductions, with pre-tax dollars – not unlike a section 401(k) plan.”
The legislation would apply to stock options granted after the date of enactment.
– Nevin Adams email@example.com