The Internal Revenue Service recently released an online tool to help U.S. withholding agents comply with withholding and reporting obligations on IRS…
Thursday, January 14, 2021
Now that 2021 is here, corporations should be aware of IRS reporting requirements regarding certain 2020 stock transactions with their employees.
Section 6039 of the Internal Revenue Code of 1986, as amended (the “Code”), requires a corporation to report (i) the transfer by the corporation of its stock with respect to the exercise of an incentive stock option (“ISO”) and (ii) the initial transfer of legal title to the corporation’s stock acquired at a discount pursuant to an employee stock purchase plan (“ESPP”) if such transfer under the ESPP is with respect to an exercise price that is either (I) less than the value of the stock on the date of grant or (II) not fixed or determinable on the date of grant. Specifically, Section 6039(a) of the Code requires corporations to file information returns relating to such exercises and transfers with the Internal Revenue Service (the “IRS”), while Section 6039(b) of the Code requires co