Federal Tax

Statutory Stock Options (Portfolio 381)

  • This Portfolio details the structure, the tax rules, and requirements for establishing incentive stock options and employee stock purchase plans.


Bloomberg Tax Portfolio, Statutory Stock Options, No. 381, details the structure of, and the tax rules regarding, incentive stock options and employee stock purchase plans. Both types of plans provide for the deferral of the recognition of taxable income upon receipt of stock pursuant to these plans; however, there are restrictions on how such plans may be designed.

This Portfolio outlines the statutory requirements for establishing an incentive stock option plan and an employee stock purchase plan, including descriptions of plan provisions that are not required. The tax results to the employer and the employee of the establishment and participation in these plans are reviewed. In addition, this Portfolio compares incentive stock options with nonqualified stock options. For an analysis of the rules governing nonqualified stock options, see 383 T.M., Nonstatutory Stock Options.

Table of Contents

I. Introduction
II. Incentive Stock Options
III. Employee Stock Purchase Plans

Alan Tawshunsky
Tawshunsky Law Firm PLLC
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