(B) EMPLOYEE STOCK PURCHASE PLANS.— 
Section 423(a) of such Code is amended by add-
ing at the end 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).’’. 
(2) EXCLUSION
FROM
DEFINITION
OF
NON-
QUALIFIED
DEFERRED
COMPENSATION
PLAN.—Sub-
section (d) of section 409A of the Internal Revenue 
Code of 1986 is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(7) TREATMENT OF QUALIFIED STOCK.—An ar-
rangement 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 solely because of an employee’s ability to 
defer recognition of income pursuant to an election 
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 (13), by striking the period 
at the end of paragraph (14) and inserting a comma, and 
by inserting after paragraph (14) the following new para-
graphs: 
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‘‘(15) the amount excludable from gross income 
under subparagraph (A) of section 83(i)(1), 
‘‘(16) the amount includible in gross income 
under subparagraph (B) of section 83(i)(1) with re-
spect to an event described in such subparagraph 
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: 
‘‘(o) 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 therefor, 
unless it is shown that such failure is due to reasonable 
cause and not to willful neglect, there shall be paid, on no-
tice and demand of the Secretary and in the same manner 
as tax, by the person failing to provide such notice, an 
amount equal to $100 for each such failure, but the total 
amount imposed on such person for all such failures during 
any calendar year shall not exceed $50,000.’’. 
(f) EFFECTIVE DATES.— 
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(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 re-
stricted stock units settled, after December 31, 2016. 
(2) REQUIREMENT
TO
PROVIDE
NOTICE.—The 
amendments made by subsection (e) shall apply to 
failures after December 31, 2016. 
(g) TRANSITION RULE.—Until such time as the Sec-
retary (or the Secretary’s delegate) issue regulations or 
other guidance for purposes of implementing the require-
ments of paragraph (2)(C)(i)(II) of section 83(i) of the In-
ternal Revenue Code of 1986 (as added by this section), or 
the requirements of paragraph (6) of such section, a cor-
poration shall be treated as being in compliance with such 
requirements (respectively) if such corporation complies 
with a reasonable good faith interpretation of such require-
ments. 
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Union Calendar No. 581 
114TH CONGRESS 
2D SESSION 
H. R. 5719 
[Report No. 114–748] 
A BILL 
To amend the Internal Revenue Code of 1986 to 
modify the tax treatment of certain equity grants. 
SEPTEMBER 16, 2016 
Reported with an amendment, committed to the Com-
mittee of the Whole House on the State of the Union, 
and ordered to be printed 
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