with respect to the qualified stock are the 
same. 
‘‘(3) QUALIFIED
EMPLOYEE; EXCLUDED
EM-
PLOYEE.—For purposes of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
employee’ means any individual who— 
‘‘(i) is not an excluded employee, and 
‘‘(ii) agrees in the election made 
under this subsection to meet such require-
ments as are determined by the Secretary 
to be necessary to ensure that the with-
holding requirements of the corporation 
under chapter 24 with respect to the quali-
fied stock are met. 
‘‘(B) EXCLUDED
EMPLOYEE.—The term 
‘excluded employee’ means, with respect to any 
corporation, any individual— 
‘‘(i) who was a 1-percent owner (with-
in the meaning of section 416(i)(1)(B)(ii)) 
at any time during the 10 preceding cal-
endar years, 
‘‘(ii) who is or has been at any prior 
time— 
VerDate Sep 11 2014 
01:06 Jul 08, 2017
Jkt 069200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H3084.IH
H3084
SSpencer on DSKBBV9HB2PROD with BILLS
‘‘(I) the chief executive officer of 
such corporation or an individual act-
ing in such a capacity, or 
‘‘(II) the chief financial officer of 
such corporation or an individual act-
ing in such a capacity, 
‘‘(iii) who bears a relationship de-
scribed in section 318(a)(1) to any indi-
vidual described in subclause (I) or (II) of 
clause (ii), or 
‘‘(iv) who was for any of the 10 pre-
ceding taxable years one of the 4 highest 
compensated officers of such corporation, 
determined with respect to each such tax-
able year on the basis of the shareholder 
disclosure rules for compensation under 
the Securities Exchange Act of 1934 (as if 
such rules applied to such corporation). 
‘‘(4) ELECTION.— 
‘‘(A) TIME FOR MAKING ELECTION.—An 
election with respect to qualified stock shall be 
made under this subsection no later than 30 
days after the first date the rights of the em-
ployee in such stock are transferable or are not 
subject to a substantial risk of forfeiture, 
VerDate Sep 11 2014 
01:06 Jul 08, 2017
Jkt 069200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H3084.IH
H3084
SSpencer on DSKBBV9HB2PROD with BILLS
whichever occurs earlier, and shall be made in 
a manner similar to the manner in which an 
election is made under subsection (b). 
‘‘(B) LIMITATIONS.—No election may be 
made under this section with respect to any 
qualified stock if— 
‘‘(i) the qualified employee has made 
an election under subsection (b) with re-
spect to such qualified stock, 
‘‘(ii) any stock of the corporation 
which issued the qualified stock is readily 
tradable on an established securities mar-
ket 
(as 
determined 
under 
paragraph 
(1)(B)(iii)) at any time before the election 
is made, or 
‘‘(iii) such corporation purchased any 
of its outstanding stock in the calendar 
year preceding the calendar year which in-
cludes the first date the rights of the em-
ployee in such stock are transferable or are 
not subject to a substantial risk of for-
feiture, unless— 
‘‘(I) not less than 25 percent of 
the total dollar amount of the stock so 
purchased is deferral stock, and 
VerDate Sep 11 2014 
01:06 Jul 08, 2017
Jkt 069200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H3084.IH
H3084
SSpencer on DSKBBV9HB2PROD with BILLS
‘‘(II) the determination of which 
individuals from whom deferral stock 
is purchased is made on a reasonable 
basis. 
‘‘(C) DEFINITIONS
AND
SPECIAL
RULES 
RELATED TO LIMITATION ON STOCK REDEMP-
TIONS.— 
‘‘(i) DEFERRAL
STOCK.—For pur-
poses of this paragraph, the term ‘deferral 
stock’ means stock with respect to which 
an election is in effect under this sub-
section. 
‘‘(ii) DEFERRAL
STOCK
WITH
RE-
SPECT
TO
ANY
INDIVIDUAL
NOT
TAKEN 
INTO ACCOUNT IF INDIVIDUAL HOLDS DE-
FERRAL STOCK WITH LONGER DEFERRAL 
PERIOD.—Stock purchased by a corpora-
tion from any individual shall not be treat-
ed as deferral stock for purposes of sub-
paragraph (B)(iii) if such individual (im-
mediately after such purchase) holds any 
deferral stock with respect to which an 
election has been in effect under this sub-
section for a longer period than the elec-
VerDate Sep 11 2014 
01:06 Jul 08, 2017
Jkt 069200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6201
E:\BILLS\H3084.IH
H3084
SSpencer on DSKBBV9HB2PROD with BILLS
tion with respect to the stock so pur-
chased. 
‘‘(iii) 
PURCHASE
OF
ALL
OUT-
STANDING
DEFERRAL
STOCK.—The re-
quirements of subclauses (I) and (II) of 
subparagraph (B)(iii) shall be treated as 
met if the stock so purchased includes all 
of the corporation’s outstanding deferral 
stock. 
‘‘(iv) REPORTING.—Any corporation 
which has outstanding deferral stock as of 
the beginning of any calendar year and 
which purchases any of its outstanding 
stock during such calendar year shall in-
clude on its return of tax for the taxable 
year in which, or with which, such calendar 
year ends the total dollar amount of its 
outstanding stock so purchased during 
such calendar year and such other infor-
mation as the Secretary may require for 
purposes of administering this paragraph. 
‘‘(5) CONTROLLED GROUPS.—For purposes of 
this subsection, all corporations which are treated as 
a single employer under section 414(b) shall be 
treated as one corporation. 
VerDate Sep 11 2014 
01:06 Jul 08, 2017
Jkt 069200
PO 00000
Frm 00013
Fmt 6652
Sfmt 6201
E:\BILLS\H3084.IH
H3084
SSpencer on DSKBBV9HB2PROD with BILLS
‘‘(6) NOTICE REQUIREMENT.—Any corporation 
which transfers qualified stock to a qualified em-
ployee shall, at the time that (or a reasonable period 
before) an amount attributable to such stock would 
(but for this subsection) first be includible in the 
gross income of such employee— 
‘‘(A) certify to such employee that such 
stock is qualified stock, and 
‘‘(B) notify such employee— 
‘‘(i) that the employee may elect to 
defer income on such stock under this sub-
section, and 
‘‘(ii) that, if the employee makes such 
an election— 
‘‘(I) the amount of income recog-
nized at the end of the deferral period 
will be based on the value of the stock 
at the time at which the rights of the 
employee in such stock first become 
transferable or not subject to substan-
tial risk of forfeiture, notwithstanding 
whether the value of the stock has de-
clined during the deferral period, 
‘‘(II) the amount of such income 
recognized at the end of the deferral 
VerDate Sep 11 2014 
01:06 Jul 08, 2017
Jkt 069200
PO 00000
Frm 00014
Fmt 6652
Sfmt 6201
E:\BILLS\H3084.IH
H3084
SSpencer on DSKBBV9HB2PROD with BILLS
period will be subject to withholding 
under section 3401(i) at the rate de-
termined under section 3402(t), and 
‘‘(III) the responsibilities of the 
employee (as determined by the Sec-
retary under paragraph (3)(A)(ii)) 
with respect to such withholding.’’. 
(b) WITHHOLDING.— 
(1) TIME OF WITHHOLDING.—Section 3401 of 
the Internal Revenue Code of 1986 is amended by 
adding at the end the following new subsection: 
‘‘(i) QUALIFIED STOCK FOR WHICH AN ELECTION IS 
IN EFFECT UNDER SECTION 83(i).—For purposes of sub-
section (a), qualified stock (as defined in section 83(i)) 
with respect to which an election is made under section 
83(i) shall be treated as wages— 
‘‘(1) received on the earliest date described in 
section 83(i)(1)(B), and 
‘‘(2) in an amount equal to the amount in-
cluded in income under section 83 for the taxable 
year which includes such date.’’. 
(2) AMOUNT OF WITHHOLDING.—Section 3402 
of such Code is amended by adding at the end the 
following new subsection: 
VerDate Sep 11 2014 
01:06 Jul 08, 2017
Jkt 069200
PO 00000
Frm 00015
Fmt 6652
Sfmt 6201
E:\BILLS\H3084.IH
H3084
SSpencer on DSKBBV9HB2PROD with BILLS
‘‘(t) 
RATE
OF
WITHHOLDING
FOR
CERTAIN 
STOCK.—In the case of any qualified stock (as defined in 
section 83(i)(2)) with respect to which an election is made 
under section 83(i)— 
‘‘(1) the rate of tax under subsection (a) shall 
not be less than the maximum rate of tax in effect 
under section 1, and 
‘‘(2) such stock shall be treated for purposes of 
section 3501(b) in the same manner as a non-cash 
fringe benefit.’’. 
(c) COORDINATION WITH OTHER DEFERRED COM-
PENSATION RULES.— 
(1) ELECTION TO APPLY DEFERRAL TO STATU-
TORY OPTIONS.— 
(A) INCENTIVE STOCK OPTIONS.—Section 
422(b) of the Internal Revenue Code of 1986 is 
amended by adding at the end the following: 
‘‘Such term shall not include any option if an 
election is made under section 83(i) with re-
spect to the stock received in connection with 
the exercise of such option.’’. 
(B) 
EMPLOYEE
STOCK
PURCHASE 
PLANS.—Section 423 of such Code is amend-
ed— 
VerDate Sep 11 2014 
01:06 Jul 08, 2017
Jkt 069200
PO 00000
Frm 00016
Fmt 6652
Sfmt 6201
E:\BILLS\H3084.IH
H3084
SSpencer on DSKBBV9HB2PROD with BILLS
(i) by adding at the end of subsection 
(a) the following flush sentence: 
‘‘The preceding sentence shall not apply to any share of 
stock with respect to which an election is made under sec-
tion 83(i).’’; and 
(ii) in subsection (b)(5), by striking 
‘‘and’’ before ‘‘the plan’’ and by inserting 
‘‘, and the rules of section 83(i) shall apply 
in determining which employees have a 
right to make an election under such sec-
tion’’ before the semicolon at the end. 
(C) CONFORMING AMENDMENTS.— 
(i) Section 3121(a)(22)(A) of the In-
ternal Revenue Code of 1986 is amended 
by inserting ‘‘(other than qualified stock 
(as defined in section 83(i)(2)) with re-
spect to which an election is in effect 
under section 83(i))’’ after ‘‘a share of 
stock’’. 
(ii) Section 209(a)(19)(A) of the So-
cial Security Act (42 U.S.C. 409) is 
amended by inserting ‘‘(other than quali-
fied stock (as defined in section 83(i)(2) of 
the Internal Revenue Code of 1986) with 
respect to which an election is in effect 
VerDate Sep 11 2014 
02:13 Jul 11, 2017
Jkt 069200
PO 00000
Frm 00017
Fmt 6652
Sfmt 6201
E:\BILLS\H3084.IH
H3084
SSpencer on DSKBBV9HB2PROD with BILLS
under section 83(i) of such Code)’’ after ‘‘a 
share of stock’’. 
(iii) Section 3231(e)(12)(A) of the In-
ternal Revenue Code of 1986 is amended 
by inserting ‘‘(other than qualified stock 
(as defined in section 83(i)(2)) with re-
spect to which an election is in effect 
under section 83(i))’’ after ‘‘a share of 
stock’’. 
(iv) Section 3306(b)(19)(A) of the In-
ternal Revenue Code of 1986 is amended 
by inserting ‘‘(other than qualified stock 
(as defined in section 83(i)(2)) with re-
spect to which an election is in effect 
under section 83(i))’’ after ‘‘a share of 
stock’’. 
(2) TREATMENT
UNDER
NONQUALIFIED
DE-
FERRED COMPENSATION PLAN.—Subsection (d) of 
section 409A of such Code is amended by adding at 
the end the following new paragraph: 
‘‘(7) TREATMENT OF QUALIFIED STOCK.—An 
arrangement under which an employee may receive 
qualified stock (as defined in section 83(i)(2)) shall 
not be treated as a nonqualified deferred compensa-
tion plan, or as failing to meet the requirements of 
VerDate Sep 11 2014 
02:13 Jul 11, 2017
Jkt 069200
PO 00000
Frm 00018
Fmt 6652
Sfmt 6201
E:\BILLS\H3084.IH
H3084
SSpencer on DSKBBV9HB2PROD with BILLS
this section, solely because of an employee’s election, 
or ability to make an election, to defer recognition 
of income under section 83(i).’’. 
(d) INFORMATION REPORTING.—Section 6051(a) of 
the Internal Revenue Code of 1986 is amended by striking 
‘‘and’’ at the end of paragraph (14), by striking the period 
at the end of paragraph (15) and inserting a comma, and 
by inserting after paragraph (15) the following new para-
graphs: 
‘‘(16) the amount includible in gross income 
under subparagraph (A) of section 83(i)(1) with re-
spect to an event described in subparagraph (B) of 
such section which occurs in such calendar year, and 
‘‘(17) the aggregate amount of income which is 
being deferred pursuant to elections under section 
83(i), determined as of the close of the calendar 
year.’’. 
(e) PENALTY FOR FAILURE OF EMPLOYER TO PRO-
VIDE NOTICE OF TAX CONSEQUENCES.—Section 6652 of 
the Internal Revenue Code of 1986 is amended by adding 
at the end the following new subsection: 
‘‘(p) FAILURE TO PROVIDE NOTICE UNDER SECTION 
83(i).—In the case of each failure to provide a notice as 
required by section 83(i)(6), at the time prescribed there-
for, unless it is shown that such failure is due to reason-
VerDate Sep 11 2014 
01:06 Jul 08, 2017
Jkt 069200
PO 00000
Frm 00019
Fmt 6652
Sfmt 6201
E:\BILLS\H3084.IH
H3084
SSpencer on DSKBBV9HB2PROD with BILLS
able cause and not to willful neglect, there shall be paid, 
on notice and demand of the Secretary and in the same 
manner as tax, by the person failing to provide such no-
tice, an amount equal to $100 for each such failure, but 
the total amount imposed on such person for all such fail-
ures during any calendar year shall not exceed $50,000.’’. 
(f) GUIDANCE.—Not later than December 31, 2018, 
the Secretary of the Treasury (or the Secretary’s delegate) 
shall issue guidance with respect to section 83(i) of the 
Internal Revenue Code of 1986 (as added by this section), 
including guidance relating to— 
(1) the determination the time stock first be-
comes transferable under such section; 
(2) the determination of rights and privileges 
with respect to stock under paragraph (2)(C)(iii) of 
such section; and 
(3) 
the 
requirements 
of 
paragraphs 
(2)(C)(i)(II) and (6) of such section. 
(g) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to stock attributable to options exercised, 
or restricted stock units settled, after December 31, 
2019. 
VerDate Sep 11 2014 
01:06 Jul 08, 2017
Jkt 069200
PO 00000
Frm 00020
Fmt 6652
Sfmt 6201
E:\BILLS\H3084.IH
H3084
SSpencer on DSKBBV9HB2PROD with BILLS