Source: https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section422&num=0&edition=prelim
Timestamp: 2020-01-29 20:53:11
Document Index: 60030429

Matched Legal Cases: ['§ 422', '§422', '§251', '§422', '§102', '§555', '§2662', '§321', '§1847', '§1003', '§422', '§11801', '§13603', '§221', '§603', '§1906', '§6', '§11801', '§11801', '§11801', '§11801', '§1003', '§1003', '§1003', '§321', '§321', '§321', '§321', '§321', '§321', '§321', '§321', '§1847', '§321', '§2662', '§102', '§102', '§102', '§102', '§321', '§555', '§1855', '§251', '§2', '§1003']

[USC02] 26 USC 422: Incentive stock options
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26 USC 422: Incentive stock options Text contains those laws in effect on January 28, 2020
§422. Incentive stock options
Section 421(a) shall apply with respect to the transfer of a share of stock to an individual pursuant to his exercise of an incentive stock option if-
For purposes of this part, the term "incentive stock option" means an option granted to an individual for any reason connected with his employment by a corporation, if granted by the employer corporation or its parent or subsidiary corporation, to purchase stock of any of such corporations, but only if-
Such term shall not include any option if (as of the time the option is granted) the terms of such option provide that it will not be treated as an incentive stock option. Such term shall not include any option if an election is made under section 83(i) with respect to the stock received in connection with the exercise of such option.
(1) Good faith efforts to value stock
An option which meets the requirements of subsection (b) shall be treated as an incentive stock option even if-
To the extent that the aggregate fair market value of stock with respect to which incentive stock options (determined without regard to this subsection) are exercisable for the 1st time by any individual during any calendar year (under all plans of the individual's employer corporation and its parent and subsidiary corporations) exceeds $100,000, such options shall be treated as options which are not incentive stock options.
(Added Pub. L. 97–34, title II, §251(a), Aug. 13, 1981, 95 Stat. 256 , §422A; amended Pub. L. 97–448, title I, §102(j)(1)–(4), Jan. 12, 1983, 96 Stat. 2373 ; Pub. L. 98–369, div. A, title V, §555(a)(1), div. B, title VI, §2662(f)(1), July 18, 1984, 98 Stat. 897 , 1159; Pub. L. 99–514, title III, §321(a), (b), title XVIII, §1847(b)(5), Oct. 22, 1986, 100 Stat. 2220 , 2856; Pub. L. 100–647, title I, §1003(d)(1)(A), (2), Nov. 10, 1988, 102 Stat. 3384 ; renumbered §422 and amended Pub. L. 101–508, title XI, §11801(c)(9)(A)(i), (C), Nov. 5, 1990, 104 Stat. 1388–524 , 1388-525; Pub. L. 115–97, title I, §13603(c)(1)(A), Dec. 22, 2017, 131 Stat. 2163 .)
A prior section 422, added Pub. L. 88–272, title II, §221(a), Feb. 26, 1964, 78 Stat. 64 ; amended Pub. L. 94–455, title VI, §603(a), (b), title XIX, §1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1574 , 1834; Pub. L. 96–589, §6(i)(3), Dec. 24, 1980, 94 Stat. 3410 , related to qualified stock options, prior to repeal by Pub. L. 101–508, title XI, §11801(a)(20), Nov. 5, 1990, 104 Stat. 1388–521 . For savings provision, see section 11821(b) of Pub. L. 101–508, set out as a note under section 45K of this title.
2017-Subsec. (b). Pub. L. 115–97 inserted at end of concluding provisions "Such term shall not include any option if an election is made under section 83(i) with respect to the stock received in connection with the exercise of such option."
1990-Pub. L. 101–508, §11801(c)(9)(A)(i), renumbered section 422A of this title as this section.
Subsec. (a)(2). Pub. L. 101–508, §11801(c)(9)(C)(i), substituted "424(a)" for "425(a)".
Subsec. (c)(5) to (8). Pub. L. 101–508, §11801(c)(9)(C)(ii), redesignated pars. (6) to (8) as (5) to (7), respectively, and struck out former par. (5) "Coordination with sections 422 and 424" which read as follows: "Sections 422 and 424 shall not apply to an incentive stock option."
1988-Subsec. (b). Pub. L. 100–647, §1003(d)(1)(A), inserted at end "Such term shall not include any option if (as of the time the option is granted) the terms of such option provide that it will not be treated as an incentive stock option."
Subsec. (b)(7). Pub. L. 100–647, §1003(d)(2)(B), struck out par. (7) which read as follows: "under the terms of the plan, the aggregate fair market value (determined at the time the option is granted) of the stock with respect to which incentive stock options are exercisable for the 1st time by such individual during any calendar year (under all such plans of the individual's employer corporation and its parent and subsidiary corporations) shall not exceed $100,000."
Subsec. (c)(1). Pub. L. 100–647, §1003(d)(2)(C), substituted "subsection (d)" for "paragraph (7) of subsection (b)".
1986-Subsec. (b)(7). Pub. L. 99–514, §321(a), added par. (7) and struck out former par. (7) which read as follows: "such option by its terms is not exercisable while there is outstanding (within the meaning of subsection (c)(7)) any incentive stock option which was granted, before the granting of such option, to such individual to purchase stock in his employer corporation or in a corporation which (at the time of the granting of such option) is a parent or subsidiary corporation of the employer corporation, or in a predecessor corporation of any of such corporations; and".
Subsec. (b)(8). Pub. L. 99–514, §321(a), struck out par. (8) which read as follows: "in the case of an option granted after December 31, 1980, under the terms of the plan the aggregate fair market value (determined as of the time the option is granted) of the stock for which any employee may be granted incentive stock options in any calendar year (under all such plans of his employer corporation and its parent and subsidiary corporation) shall not exceed $100,000 plus any unused limit carryover to such year."
Subsec. (c)(1). Pub. L. 99–514, §321(b)(2), substituted "paragraph (7) of subsection (b)" for "paragraph (8) of subsection (b) and paragraph (4) of this subsection".
Subsec. (c)(4). Pub. L. 99–514, §321(b)(1), redesignated par. (5) as (4) and struck out former par. (4) relating to carryover of unused limit.
Subsec. (c)(5), (6). Pub. L. 99–514, §321(b)(1)(B), redesignated pars. (6) and (8) as (5) and (6), respectively. Former par. (5) redesignated (4).
Subsec. (c)(7). Pub. L. 99–514, §321(b)(1), redesignated par. (9) as (7) and struck out former par. (7) which provided that for purposes of subsec. (b)(7) any incentive stock option be treated as outstanding until such option was exercised in full or expired by reason of lapse of time.
Subsec. (c)(8). Pub. L. 99–514, §321(b)(1)(B), redesignated par. (10) as (8). Former par. (8) redesignated (6).
Subsec. (c)(9). Pub. L. 99–514, §321(b)(1)(B), redesignated par. (9) as (7).
Pub. L. 99–514, §1847(b)(5), substituted "section 22(e)(3)" for "section 37(e)(3)".
Subsec. (c)(10). Pub. L. 99–514, §321(b)(1)(B), redesignated par. (10) as (8).
1984-Subsec. (c)(9). Pub. L. 98–369, §2662(f)(1), substituted "section 37(e)(3)" for "section 105(d)(4)".
1983-Subsec. (b)(8). Pub. L. 97–448, §102(j)(1), substituted "granted incentive stock options" for "granted options".
Subsec. (c)(1). Pub. L. 97–448, §102(j)(2), substituted "Good faith efforts to value stock" for "Exercise of option when price is less than value of stock" as par. (1) heading and inserted sentence providing that, to the extent provided in regulations by the Secretary, a rule similar to that already enunciated in the paragraph applies for purposes of par. (8) of subsec. (b) and par. (4) of subsec. (c).
Subsec. (c)(2)(A). Pub. L. 97–448, §102(j)(3), substituted "either of the periods" for "the 2-year period".
Subsec. (c)(4)(A)(ii). Pub. L. 97–448, §102(j)(4), substituted "granted incentive stock options" for "granted options".
Pub. L. 99–514, title III, §321(c), Oct. 22, 1986, 100 Stat. 2220 , provided that: "The amendments made by this section [amending this section] shall apply to options granted after December 31, 1986."
Amendment by section 1847(b)(5) of Pub. L. 99–514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98–369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99–514, set out as a note under section 48 of this title.
Pub. L. 98–369, div. A, title V, §555(c)(1), July 18, 1984, 98 Stat. 898 , as amended by Pub. L. 99–514, title XVIII, §1855(a)(1), Oct. 22, 1986, 100 Stat. 2882 , provided that: "The amendment made by subsection (a)(1) [amending this section] shall apply to options granted after March 20, 1984, except that such subsection shall not apply to any incentive stock option granted before September 20, 1984, pursuant to a plan adopted or corporate action taken by the board of directors of the grantor corporation before May 15, 1984."
Pub. L. 97–34, title II, §251(c), Aug. 13, 1981, 95 Stat. 259 , as amended by Pub. L. 99–514, §2, Oct. 22, 1986, 100 Stat. 2095 , provided that:
"(1) Options to which section applies.-
"(A) In general.-Except as provided in subparagraph (B), the amendments made by this section [enacting this section and amending sections 421, 425 [now 424], and 6039 of this title] shall apply with respect to options granted on or after January 1, 1976, and exercised on or after January 1, 1981, or outstanding on such date.
"(B) Election and designation of options.-In the case of an option granted before January 1, 1981, the amendments made by this section shall apply only if the corporation granting such option elects (in the manner and at the time prescribed by the Secretary of the Treasury or his delegate) to have the amendments made by this section apply to such option. The aggregate fair market value (determined at the time the option is granted) of the stock for which any employee was granted options (under all plans of his employer corporation and its parent and subsidiary corporations) to which the amendments made by this section apply by reason of this subparagraph shall not exceed $50,000 per calendar year ans shall not exceed $200,000 in the aggregate.
"(2) Changes in terms of options.-In the case of an option granted on or after January 1, 1976, and outstanding on the date of the enactment of this Act [Aug. 13, 1981], paragraph (1) of section 425(h) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] shall not apply to any change in the terms of such option (or the terms of the plan under which granted, including shareholder approval) made within 1 year after such date of enactment to permit such option to qualify as a incentive stock option."
Pub. L. 100–647, title I, §1003(d)(1)(B), Nov. 10, 1988, 102 Stat. 3384 , provided that: "In the case of an option granted after December 31, 1986, and on or before the date of the enactment of this Act [Nov. 10, 1988], such option shall not be treated as an incentive stock option if the terms of such option are amended before the date 90 days after such date of enactment to provide that such option will not be treated as an incentive stock option."