2010 Reporting Obligations of Companies with ISO or ESPP Arrangements


Companies with employee exercises of either ISO or ESPP awards during 2010 will be subject to a new IRS tax reporting obligation. The requirements are substantially different than for IRS Form W-2, however, many of the vendors and consultants that specialize in the administration and record-keeping for stock plans can provide assistance.

Companies with incentive stock option (ISO) or employee stock purchase plan (ESPP) arrangements will be subject to new tax reporting obligations for the first time in 2010. These obligations include both an information return filing to be made with the IRS and a more comprehensive employee information statement if an employee has either exercised ISOs or transferred the legal title to shares of stock in connection with exercising the option of an ESPP arrangement (including the transfer to a broker or financial institution).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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