Compensación y beneficios Alentamos a una cultura donde existe un vínculo claro entre el salario y el rendimiento. La compensación está diseñada para ser justa y sin discriminación, y realizamos una investigación de mercado para asegurar que el valor total de nuestros programas de compensación y beneficios sea competitivo dentro de nuestra industria. Nuestros programas de jubilación, beneficios y ahorros están diseñados para dar a los empleados flexibilidad y elección para que puedan satisfacer sus necesidades y las necesidades de sus familias. Ofrecemos una amplia gama de planes de retiro, beneficios y ahorros. Estos incluyen: Un plan de pensión de beneficio definido, completamente pagado por el banco, líder de la industria para cada empleado elegible. El plan ofrece un complemento opcional a un costo muy asequible y la previsión de pensiones en línea y herramientas de planificación de la jubilación. Un plan de beneficios flexible con opciones comprensivas que incluyen una red de seguridad esencial de cobertura sin costo y créditos de beneficios TD para ayudar a pagar los beneficios de salud opcionales, con créditos de beneficios adicionales para los empleados que cubren a los dependientes pagados vacaciones para empleados a tiempo completo y parcial En el nivel de trabajo y la duración del servicio, y una amplia gama de programas de bienestar y herramientas y recursos 24/7 en línea El plan de propiedad de los empleados. TD se enfrenta a 100 de las 250 primeras contribuciones de los empleados cada año y 50 de cualquier contribución adicional a una contribución máxima de TD de 3,5 de los ingresos elegibles de los empleados o 2,250, lo que ocurra primero. El plan del constructor del futuro del empleado. Que alienta a los empleados a ahorrar a través de deducciones de nómina, sumas globales o su pago de incentivos. TD paga todos los cargos de administración de inversiones y administración de programas. Banca de empleados. Los empleados a tiempo completo y los empleados a tiempo parcial y los jubilados con derecho a beneficios reciben tarifas y descuentos preferidos en una amplia gama de productos y servicios de crédito, incluyendo seguros de hogar y automóviles. Los empleados pueden seleccionar la cobertura para sí mismos y sus familias de un plan de beneficios flexible que enfatiza el bienestar y la atención preventiva e incluye un programa de asistencia a los empleados. Un plan de jubilación 401 (k) ofrece una contribución fija del empleador entre 2 y 6 del salario más hasta 4,5 de salario en las contribuciones a juego en los aplazamientos de los empleados para un posible 10,5 en los ahorros de jubilación pagados por el banco Tiempo de pago para tiempo completo y parte - Basado en el nivel de trabajo y la duración del servicio. Las opciones de beneficios permiten a los empleados de U. K. la flexibilidad de diseñar su propio paquete de recompensas. TD Waterhouse U. K. recibió el premio más alto de Investors in People por sus prácticas de gestión de personas. Esto sitúa a TD Waterhouse entre las primeras 0,7 empresas de todo el mundo en esta área. La compañía también recibió un Premio de Buenas Prácticas por el Bienestar en Salud por sus Beneficios y Estrategia de RSE. En 2010 convertimos muchos de nuestros procesos basados en papel en formularios en línea. Los empleados canadienses pueden ahora completar estas acciones en línea: Presentar algunas reclamaciones de beneficios y ver las declaraciones de reclamo. Comprobar los saldos de la cuenta Iniciar las transacciones y ver las declaraciones anuales del plan de pensiones y ahorros. En 2010, gastamos casi 6 mil millones en compensación y beneficios para empleados. Salarios Globales y Beneficios para el Empleado Beneficios de TD En TD, invertimos en nuestros empleados ofreciendo oportunidades de ascenso, salarios competitivos, programas de incentivos y un excelente paquete de beneficios. Cuando te unes al Banco, te unes a una cultura de apoyo. Nuestros planes de beneficios, retiro y ahorro son una parte importante de ofrecer a nuestros empleados beneficios y seguridad, permitiéndoles ser su mejor ndash dentro y fuera del trabajo. Sabemos que equilibrar las necesidades de trabajo y hogar puede ser increíblemente difícil. También reconocemos la importancia de encontrar el equilibrio adecuado para nuestros empleados. Thatrsquos por qué nos esforzamos para proporcionar a nuestros empleados con una variedad de opciones de trabajo para adaptarse a sus necesidades de estilo de vida hoy, mañana y en el futuro. Debido a que la vida no se detiene, ofrecemos opciones de trabajo flexibles para ayudarle a administrar los roles críticos que desempeña en su vida personal, así como en su profesional. Employee Benefit Reviews Mostrando 1ndash10 de 273 comentarios ldquoEmployer coincidiendo con cierto percentagerdquo ldquoThe BEST Las deducciones y el pago son muy razonables. rdquo ldquoEsta es una de las mejores partes de TD039 Y si no usas todo en el año tienes el privilegio de cuidar Una cierta cantidad a lo siguiente. Rdquo Lo mejor del paquete de beneficios es cuántos días salimos durante el año (vacaciones) y cuánto PTO puede acumular. También creo que es muy conveniente que usted puede ir negativo en las horas PTO, siempre y cuando usted los haga. Una desventaja de esto, sin embargo, es que necesitamos usar nuestras propias horas PTO para los días de fiesta que conseguimos. Simplemente parece extraño. Marcar como Inapropiado Marcar como Inapropiado Este documento contiene las regulaciones finales relativas a las opciones otorgadas en virtud de un plan de compra de acciones para empleados según se define en la sección 423 del Código de Rentas Internas (Código). Estas regulaciones finales afectan a ciertos contribuyentes que participan en la transferencia de acciones de acuerdo con el ejercicio de opciones otorgadas bajo un plan de compra de acciones para empleados. Estos reglamentos finales proporcionan orientación para ayudar a los contribuyentes a cumplir con la sección 423, además de aclarar ciertas reglas con respecto a las opciones otorgadas bajo un plan de compra de acciones para empleados. Este documento también contiene reglamentos definitivos bajo los artículos 421, 422 y 424 del Código. FECHAS: Fecha de vigencia: Estas regulaciones entrarán en vigor el 17 de noviembre de 2009. Fecha de aplicabilidad: Estas regulaciones aplican a partir del 1 de enero de 2010. PARA MÁS INFORMACIÓN CONTACTE: Thomas Scholz o Ilya Enkishev al (202) 622-6030 (no un peaje - Número libre). INFORMACIÓN COMPLEMENTARIA: Antecedentes Este documento contiene las enmiendas finales al Reglamento del Impuesto sobre la Renta (26 CFR parte 1) bajo las secciones 421, 422, 423 y 424 del Código. La sección 423 fue agregada al Código por la sección 221 (a) de la Ley de Ingresos de 1964, la Ley Pública 88-272 (78 Stat. 63 (1964)). Los artículos 1402 (b) (1) (C) y 1402 (b) (2) de la Ley de Reforma Tributaria de 1976, la Ley Pública 94-455 (90 Estatutos 1731 y 1732) -1733 (1976)) sección 1001 (b) (5) de la Ley de Reducción del Déficit de 1984, Ley Pública 98-369 (98 Estat. 1011 (1984)) sección 1114 de la Ley de Reforma Tributaria de 1986, 514 (100 Estatutos 2451 (1986)) y 11801 (c) (9) (D) (i), (ii) y 11801 (c) (9) (E) de la Ley General de Reconciliación Presupuestaria de 1990, Ley 101-508 (104 Stat. 1388-525 (1990)). Los reglamentos de la sección 423 fueron publicados en el Registro Federal el 23 de junio de 1966 (T. D. 6887, 1966-2 C. B. 129). Estos reglamentos fueron modificados el 27 de septiembre de 1979 (TD 7645, 1979-2 CB 198), 31 de octubre de 1980 (TD 7728, 1980-2 CB 236) y 1 de diciembre de 1988 (TD 8235, 1989-1 CB 117) . En el Aviso 2004-55, 2004-2, CB 319 (23 de agosto de 2004)), el IRS y el Departamento del Tesoro solicitaron comentarios sobre si la reglamentación vigente En el artículo 423, y en caso afirmativo, qué cuestiones deben abordarse. El 29 de julio de 2008, el Departamento del Tesoro publicó un aviso de propuesta de reglamentación (REG-106251-08, 2008-39 IRB 774) en el Registro Federal (73 FR 43875) en virtud del artículo 423. Se celebró una audiencia pública sobre la propuesta de reglamento El 15 de enero de 2009. Se recibieron comentarios escritos y electrónicos que respondían al aviso de propuesta de reglamentación. Después de considerar estas observaciones, el Departamento de Hacienda adopta las regulaciones propuestas como normativa final, con las modificaciones establecidas en esta decisión del Tesoro. Las revisiones significativas se discuten en este preámbulo. En general, el tratamiento fiscal de la concesión de una opción de compra de acciones en relación con la prestación de servicios y la transferencia de acciones en virtud del ejercicio de la opción se determina en virtud del artículo 83 y sus reglamentos. Sin embargo, el artículo 421 establece reglas especiales para determinar el tratamiento del impuesto sobre la renta de la transferencia de acciones de acuerdo con el ejercicio de una opción si se cumplen los requisitos de los artículos 422 (a) o 423 (a). El artículo 422 se aplica a las opciones sobre acciones de incentivos y el artículo 423 se aplica a las opciones otorgadas en el marco de un plan de compra de acciones para empleados (colectivamente, opciones estatutarias). De conformidad con el artículo 421, si una acción se transmite a un individuo con arreglo al ejercicio de una opción estatutaria, no hay ingresos en el momento del ejercicio de la opción con respecto a la transferencia y no se permite ninguna deducción en virtud del artículo 162 Empleador con respecto a la transferencia. El artículo 423 (a) establece que el artículo 421 se aplica a la transferencia de acciones a un individuo de conformidad con el ejercicio de una opción otorgada bajo un plan de compra de acciones de empleados si: (i) no se hace la disposición de la acción dentro de dos años a partir de la fecha De la concesión de la opción o dentro de un año a partir de la fecha de transferencia de la acción, y (ii) en todo momento durante el período que comienza en la fecha de otorgamiento y finalizará el día tres meses antes del ejercicio de la opción, Es un empleado de la corporación que otorga la opción o una matriz o subsidiaria de dicha corporación o una corporación (o una matriz o subsidiaria de dicha corporación) que emita o asume una opción de compra de acciones en una transacción a la cual se aplica la sección 424 (a). La Sección 423 (b) establece varios requisitos que deben cumplirse para que un plan califique como un plan de compra de acciones para empleados. La Sección 423 (c) provee una regla especial que es aplicable cuando el precio de ejercicio de la opción está entre 85 y 100 por ciento del valor justo de mercado de la acción en el momento en que se otorgó la opción. Explicación de Provisiones Estas regulaciones finales proporcionan un conjunto completo de reglas que rigen las opciones de compra de acciones emitidas bajo un plan de compra de acciones para empleados e incorporan sustancialmente todas las reglas contenidas en los reglamentos existentes bajo la sección 423. Estas regulaciones finales están formadas por dos secciones: Sección 1.423- 1, aplicabilidad de la sección 421 (a) y sect1.423-2, plan de compra de acciones para empleados definido. Las modificaciones a los reglamentos propuestos que se incluyen en estas regulaciones finales reflejan la consideración de los comentarios presentados por los contribuyentes. 1. Requisitos generales El reglamento propuesto establece que un plan de compra de acciones para empleados debe cumplir con los requisitos de los párrafos (i) a (ix) de la sección1.423-2 (a) (2) para calificar como plan de compra de acciones para empleados bajo la sección 423 (segundo). Los reglamentos propuestos también estipulan que los requisitos de los párrafos (iii) a (ix) de la sección 1.423-2 (a) (2) pueden ser satisfechos por los términos del plan o una oferta hecha bajo el plan. Los reglamentos finales adoptan estos requisitos de las regulaciones propuestas, aunque la designación numérica de los requisitos se modifica. Para enfatizar que los requisitos de los párrafos (iii) al (ix) de la secs. 1.423-2 (a) (2) de los reglamentos propuestos pueden ser satisfechos por los términos del plan o una oferta hecha bajo el plan, estos reglamentos finales Enumerar por separado estos requisitos en el artículo 1.423-2 (a) (3). Los comentaristas solicitaron aclaraciones sobre si las opciones con términos que son incompatibles con los términos del plan serán elegibles para el tratamiento tributario especial de la sección 421. Como se dispone en el artículo1.423-2 (a) (3) de los reglamentos propuestos, sección1. 423-2 (a) (4) de estas regulaciones finales establece que si los términos de una opción son inconsistentes con los términos del plan de compra de acciones para empleados o una oferta bajo el plan, entonces la opción no será tratada como otorgada bajo Un plan de compra de acciones para empleados. Sin embargo, una opción puede todavía calificar para el tratamiento fiscal especial de la sección 421, incluso si los términos del plan son inconsistentes con cualquiera de los requisitos en la sec. 1.423-2 (a) (3) de estas regulaciones finales, si la opción Se otorga bajo una oferta con términos que cumplen con los requisitos de la sec. 1.423-2 (a) (3). El ejemplo 2 de la sección 1.4.22-2 (e) (6) de estas regulaciones finales ilustra este principio. 2. Ofertas bajo un plan de compra de acciones para empleados Estas regulaciones finales proporcionan más orientación para planes de compra de acciones para empleados bajo los cuales se realiza más de una oferta. Como se establece en el artículo 1.423-2 (a) (1) de estas regulaciones finales, una o más ofrendas pueden ser hechas bajo un plan y las ofertas pueden ser consecutivas o solapadas. Además, de conformidad con la sección 423 (b) y su lenguaje flush, los términos de cada oferta no necesitan ser idénticos. Aunque los términos de cada oferta no necesitan ser idénticos, los términos del plan y cada oferta conjunta deben cumplir con los requisitos del artículo 1.423-2 (a) (2) y (3) de estas regulaciones finales. Por ejemplo, si las ofertas que se solapan se realizan bajo un plan de compra de acciones para empleados, cada oferta puede contener términos diferentes, siempre que los términos de cada oferta (junto con el plan) cumplan con los requisitos de la sección 1.4.22-2 (a) ) De estas regulaciones finales. Además, cuando una sociedad matriz adopta un plan de compra de acciones para empleados, puede establecer ofertas separadas con diferentes términos bajo el plan y designar qué filiales de la sociedad matriz pueden participar en una oferta particular, siempre que los términos de cada oferta El plan) satisfacen los requisitos de la sec. 1.423-2 (a) (3). Los términos "sociedad matriz" 8221 y 8220 "sociedad subsidiaria" 8221 se definen en el artículo 1.424-1 (f) de los reglamentos. a. Empleados cubiertos por el plan Los párrafos (i) a (iv) del artículo 1.423-2 (e) (1) de los reglamentos propuestos y estas regulaciones finales establecen las categorías de empleados que pueden ser excluidos de la cobertura bajo la compra de acciones de un empleado Plan o una oferta bajo el plan. El reglamento propuesto establece que las exclusiones para diversas categorías de empleados deben aplicarse de manera idéntica a todos los empleados de cada corporación cuyos empleados reciben opciones bajo el plan. Los comentaristas señalaron que el requisito de exclusiones idénticas para todas las ofertas bajo un plan limita la capacidad de hacer ofertas futuras y superpuestas que son más (o menos) inclusivas que las ofertas anteriores bajo el plan. Los comentaristas sugirieron que las regulaciones finales deberían permitir múltiples ofertas bajo un plan con diferentes exclusiones aplicables a una o más corporaciones cuyos empleados participan en la oferta particular bajo el plan. Estas regulaciones finales generalmente adoptan el enfoque sugerido por los comentaristas. De acuerdo con estas regulaciones finales, si los términos de un plan y una oferta satisfacen los requisitos del artículo 1.423-2 (e) se hacen sobre una base de oferta por oferta. Los términos de cada oferta bajo un plan pueden ser diferentes, siempre y cuando el plan y la oferta juntos cumplan con los requisitos del artículo 1.423-2 (a) (2) y (3) de estas regulaciones finales. Con respecto a la satisfacción de los requisitos de la sec. 1.423-2 (e), los términos de cada oferta pueden proveer diferentes exclusiones de empleados, según lo permitido y dentro de las limitaciones descritas en la sec. 1.423-2 (e) (1), (2 ) Y (3) de estas regulaciones finales. Las exclusiones establecidas con respecto a una oferta en particular deben aplicarse de manera idéntica a todos los empleados de toda corporación cuyos empleados reciben opciones bajo esa oferta en particular. Los ejemplos 7 y 8 de la sección 1.4.22-2 (e) (6) de estas regulaciones finales ilustran estos principios. Algunos comentaristas sugirieron que la reglamentación final permite a los empleadores excluir de la participación en el plan de los empleados que son extranjeros no residentes y que no reciben ingresos ganados que constituyen ingresos de fuentes dentro de los Estados Unidos. Otros comentaristas sugirieron que las regulaciones finales permiten a los empleadores excluir a los empleados de participación en el plan bajo una edad especificada. El IRS y el Departamento del Tesoro son conscientes de las complejidades a menudo asociadas con la participación en un plan de compra de acciones de los empleados por los extranjeros no residentes y los empleados en una determinada edad, como la mayoría de edad. Sin embargo, la sección 423 no provee exclusiones para extranjeros no residentes o empleados bajo una edad especificada. En consecuencia, el IRS y el Departamento del Tesoro están obligados por la autoridad estatutaria de proporcionar una exclusión general de la participación en el plan para los empleados que son extranjeros no residentes o empleados bajo una edad especificada. Un comentarista sugirió que las regulaciones finales proporcionan flexibilidad adicional permitiendo a los empleadores excluir de la participación en el plan altamente compensado empleados (HCE) (en el sentido de la sección 414 (q)) en cualquier base. El párrafo 1.423-2 (e) (2) (ii) del reglamento propuesto establece que los términos de un plan de compra de acciones de los empleados pueden excluir a las HCE: (a) con compensación por encima de un cierto nivel, o (b) A los requisitos de divulgación de la sección 16 (a) de la Ley de Intercambio de Valores de 1934, siempre y cuando la exclusión se aplique de manera idéntica a todos los HCEs de cada corporación cuyos empleados reciben opciones bajo el plan. Estos reglamentos finales no adoptan la sugerencia de que los HCE pueden ser excluidos de la participación en un plan de compra de acciones para empleados en cualquier base. En cambio, estas regulaciones finales ofrecen cierta flexibilidad adicional estipulando que, con respecto a la exclusión de HCEs, los términos de cada oferta hecha bajo un plan no necesitan ser idénticos con respecto a los HCEs, siempre que los HCEs sean excluidos como permitido y dentro del Limitaciones descritas en el inciso ii) de la sección1.423-2 (e) (2) de estas regulaciones finales. segundo. Igualdad de derechos y privilegios Los comentaristas sugirieron además que los reglamentos finales proporcionan flexibilidad al permitir que los empleadores hagan múltiples ofertas con diferentes derechos y privilegios aplicables a los participantes de cada oferta bajo un plan. Estas regulaciones finales generalmente adoptan el enfoque sugerido por los comentaristas. De acuerdo con estas regulaciones finales, la determinación de si los términos de una oferta cumplen con los requisitos del artículo 1.423-2 (f) se hace sobre una base de oferta por oferta. Los términos de cada oferta bajo un plan pueden ser diferentes, siempre y cuando el plan y la oferta juntos cumplan con los requisitos del artículo 1.423-2 (a) (2) y (3) de estas regulaciones finales. Sin embargo, los derechos y privilegios establecidos con respecto a una oferta en particular deben aplicarse de manera idéntica a todos los empleados de toda corporación cuyos empleados reciben opciones bajo esa oferta en particular. Los ejemplos 4 y 5 de la sección 1.4.23-2 (f) (7) de estas regulaciones finales ilustran estos principios. 3. Número máximo de acciones que puede ser comprado por un empleado Los comentaristas preguntaron si la designación de un número máximo de acciones que puede ser comprado por un empleado durante la oferta es necesaria para que el primer día del período de oferta sea la fecha De la subvención. De conformidad con los reglamentos propuestos, el artículo 1.423-2 (h) (3) de estas regulaciones finales estipula que la fecha de concesión será el primer día de un período de oferta si los términos de un plan de compra o oferta de acciones de empleado designan un máximo Número de acciones que pueden ser compradas por cada empleado durante la oferta. Igualmente, la fecha de otorgamiento será el primer día de la oferta si los términos del plan o oferta requieren la aplicación de una fórmula para establecer, en el primer día de la oferta, el número máximo de acciones que pueden ser adquiridas por cada uno Empleado durante la oferta. Sin embargo, el artículo 1.423-2 (h) (3) de estas regulaciones finales no requiere que un plan de compra de acciones de empleados o designar un número máximo de acciones que pueden ser compradas por cada empleado durante la oferta o incorporar una fórmula para establecer Un número máximo de acciones que pueden ser compradas por cada empleado durante la oferta. Si el número máximo de acciones que se pueden comprar bajo una opción no es fijo o determinable hasta la fecha en que se ejerce la opción, entonces la fecha de ejercicio será la fecha de concesión de la opción. Como se discute en el preámbulo de los reglamentos propuestos, el límite de 25,000 según el artículo 423 (b) (8) y el límite en el número total de acciones que pueden emitirse bajo un plan de compra de acciones de empleados no son suficientes para establecer el número máximo de Acciones que pueden ser compradas por un empleado bajo una opción para que la fecha de concesión sea el primer día de la oferta. Los ejemplos 1, 2, 3 y 4 de la sección 1.4.22-2 (h) (4) de estas regulaciones finales ilustran estos principios. Los comentaristas también preguntaron si un número particular de acciones es necesario para satisfacer el requisito de designar un número máximo de acciones que se pueden comprar durante la oferta para que el primer día del período de oferta sea la fecha de concesión. Ningún número particular de acciones es necesario para satisfacer este requisito y establecer el primer día del período de oferta como la fecha de concesión para la opción. Esta reglamentación final adopta el artículo 1.423-2 (h) (3) del reglamento propuesto para disponer que la designación de un número máximo de acciones sea suficiente para establecer el primer día del período de oferta como la fecha de concesión de la opción. 4. Limitación anual de 25.000 El artículo 423 (b) (8) estipula que un plan de compra de acciones para empleados debe, según sus términos, estipular que ningún empleado podrá acumular el derecho de comprar acciones en virtud de todos los planes de compra de acciones de sus empleados. Su corporación empleador y sus corporaciones relacionadas a una tasa que excede 25,000 en el valor justo de mercado de la acción (determinado en la fecha de concesión) por cada año calendario en el cual una opción otorgada al empleado está pendiente. El artículo 423 (b) (8) (A) estipula que el derecho a comprar acciones bajo una opción se devenga cuando la opción puede ser ejercitada por primera vez. Al redactar los reglamentos propuestos, el Departamento del Tesoro y el IRS estaban conscientes de que los contribuyentes estaban interpretando la limitación de 25.000 de manera inconsistente. Algunos contribuyentes interpretaron el párrafo 423 (b) (8) como significando que el límite aumenta en 25,000 por cada año calendario durante el cual la opción está pendiente y ejercitables otros contribuyentes interpretaron que las secciones significan que dicho límite aumenta por cada año calendario durante el cual la opción Es simplemente excepcional. De conformidad con los comentarios recibidos por el Departamento del Tesoro y el IRS en respuesta a la Notificación 2004-55, 2004-2 CB 319 (23 de agosto de 2004)), (ver sección 601.601 (d) (2) (ii) (b)) , El reglamento propuesto adoptó un enfoque que era generalmente consistente con la limitación de 100.000 para las opciones de acciones de incentivo y que interpretaba el artículo 423 (b) (8) para significar que el límite aumentaba en 25.000 por cada año calendario durante el cual la opción estaba pendiente y ejercitable. En respuesta a los reglamentos propuestos, varios comentaristas sugirieron que el Departamento del Tesoro y el IRS reconsideren el cálculo de la limitación de 25,000 en el artículo 423 (b) (8). Los comentaristas sugirieron que los reglamentos adoptan un enfoque que permite una opción para acumular a una tasa de 25.000 por cada año calendario que la opción es simplemente pendiente. Específicamente, a pesar de que el artículo 423 (b) (8) (A) estipula que el derecho a comprar acciones realmente se devenga cuando la opción puede ejercerse por primera vez durante un año calendario, la primera oración de la sección 423 (b) (8) El límite en los devengos es de 25.000 8220 por cada año en el cual dicha opción está pendiente.8221 Tras una consideración adicional y en respuesta a las observaciones anteriores, estas regulaciones finales modifican el inciso 1.423-2 (i) de los reglamentos propuestos para estipular que el límite aumenta por 25,000 por cada año calendario que una opción está pendiente. El ejemplo 5 del apartado 1.423-2 (i) (5) de estas regulaciones finales ha sido modificado para ilustrar este principio. 5. Requisitos de aprobación de accionistas Para calificar como un plan de compra de acciones para empleados, el artículo 423 (b) (2) requiere que el plan sea aprobado por los accionistas de la corporación que otorga en 12 meses antes o después de la fecha de adopción del plan. Estos reglamentos finales aclaran que se requiere la aprobación de nuevos accionistas si hay un cambio en las acciones con respecto a qué opciones se emiten o un cambio en la sociedad otorgante. En particular, estos reglamentos finales aclaran que los accionistas de una sociedad filial incluyen la sociedad matriz y cualquier otro accionista de la filial. Por consiguiente, estas regulaciones finales adoptan el Ejemplo 1 (iii) en el artículo 1.423-2 (c) (5) y el Ejemplo 1 (iii) en el artículo 1.422-2 (b) (6) de las regulaciones propuestas. Un comentarista de las regulaciones propuestas sugirió que se hiciera un cambio conforme al Ejemplo 9 (iii) en la sección 1.424-1 (a) (10) que trata la sustitución de opciones en el contexto de una adquisición. El ejemplo 9 (iii) en el artículo 1.424-1 (a) (10), según lo establecido anteriormente en los reglamentos, requiere que los accionistas de una compañía adquirente aprueben una modificación del plan de opciones de una subsidiaria corporativa adquirida para emitir acciones de la matriz En lugar de acciones subsidiarias. El comentarista propuso que se modificara el ejemplo para exigir a la sociedad adquirente (en lugar de sus accionistas) que aprobara la modificación del plan de opciones para emitir acciones de la matriz en lugar de acciones subsidiarias. Esta enmienda es consistente con el ejemplo 1 (iii) en el artículo 1.423-2 (c) (5) y el ejemplo 1 (iii) en el artículo 1.422-2 (b) (6) de estas regulaciones finales. Por consiguiente, el Ejemplo 9 (iii) en la sección 1.424-1 (a) (10) de estas regulaciones finales se ha modificado para reflejar la adopción de la sugerencia del comentarista. Fecha de vigencia / aplicabilidad Esta normativa se aplicará a partir del 1 de enero de 2010 y se aplicará a cualquier opción estatutaria otorgada a partir de esa fecha. Los contribuyentes pueden confiar en estas regulaciones finales para el tratamiento de cualquier opción estatutaria otorgada antes del 1 de enero de 2010. sect1.421-1 Significado y uso de ciertos términos. (C) Hora y fecha de la opción de concesión. (1) Para los propósitos de esta sección y sectsect1.421-2 a 1.424-1, el idioma 8220 la fecha de la concesión de la opción8221 y 8220 el momento en que se concede dicha opción, 8221 y frases similares se refieren a la fecha o hora en que la concesión Corporación completa la acción corporativa que constituye una oferta de acciones para la venta a un individuo bajo los términos y condiciones de una opción estatutaria. Salvo lo establecido en el inciso (h) (2) de la sección 1.423-2, una acción corporativa que constituya una oferta de acciones para la venta no se considerará completa hasta la fecha en que el número máximo de acciones que se pueden comprar bajo la opción y el El precio mínimo de la opción es fijo o determinable. J) Fecha de vigencia / aplicabilidad 8212 (1) En general. Con excepción del párrafo (c) (1) de esta sección, los reglamentos bajo esta sección entrarán en vigor el 3 de agosto de 2004. El párrafo (c) (1) de esta sección entrará en vigencia el 17 de noviembre de 2009. El párrafo (c) ) De esta sección se aplica a las opciones estatutarias otorgadas a partir del 1 de enero de 2010. Par. 3. El apartado 1.422-2, párrafo (b) (6), el Ejemplo 1 (iii) se revisa para que lea como sigue: sect1.422-2 Opciones de incentivos definidas. (Iii) Asumir los mismos hechos que en el párrafo (i) de este Ejemplo 1. Excepto que el plan fue adoptado el 1 de enero de 2010. Supongamos además que el plan fue aprobado por los accionistas de S (en este caso, P) el 1 de marzo de 2010. El 1 de enero de 2012, S cambia el plan para proporcionar que Las opciones de acciones de incentivo para la acción de P se otorgarán a los empleados de S bajo el plan. Debido a que hay un cambio en las acciones disponibles para la donación bajo el plan, el cambio se considera la adopción de un nuevo plan que debe ser aprobado por el accionista de S (en este caso, P) dentro de 12 meses antes o después del 1 de enero, 2012. Par. 4. La sección 1.422-5, párrafo (f) (1) se revisa para que lea como sigue: sect1.422-5 Disposiciones permitidas. F) Fecha de vigencia / aplicabilidad 8212 (1) En general. Excepto para el artículo 1.422-2 (b) (6) Ejemplo 1 (iii), los reglamentos bajo esta sección son efectivos el 3 de agosto de 2004. El Artículo 1.422-2 (b) (6) El Ejemplo 1 (iii) es efectivo en 17 de noviembre de 2009. Sección 1.422-2 (b) (6) El ejemplo 1 (iii) se aplica a las opciones estatutarias otorgadas a partir del 1 de enero de 2010. Par. 5. El artículo 1.423-1 se revisa para que lea como sigue: sect1.423-1 Aplicabilidad de la sección 421 (a). A) Regla general. Sujeto a lo dispuesto en el artículo 423 (c) y el artículo 1.423-2 (k), las reglas especiales del tratamiento del impuesto sobre la renta previstas en el artículo 421 (a) se aplican con respecto a la transferencia de una acción El ejercicio individual de una opción otorgada en virtud de un plan de compra de acciones para empleados, según se define en el artículo 1.423-2, si se cumplen las siguientes condiciones: (1) El individuo no hace ninguna disposición de dicha acción antes de la expiración del plazo de dos años, A partir de la fecha de concesión de la opción en virtud de la cual se transfirió dicha acción o la expiración del período de un año a partir de la fecha de transferencia de dicha acción al individuo y (2) En todo momento durante el período que comienza el La fecha de otorgamiento de la opción y terminando el día tres meses antes de la fecha de ejercicio, el individuo era un empleado de la corporación que otorga la opción, una corporación relacionada, o una corporación (o una corporación relacionada) que sustituye o asume la Opción de compra de acciones en una transacción a la que se aplica la sección 424 (a). B) Referencias cruzadas. Para las normas relativas a la relación de trabajo requerida, véase el artículo 1.421-1 (h). Para las reglas relacionadas con el efecto de una disposición descalificadora, vea la sección 421 (b) y el artículo 1.421-2 (b). Para la definición del término 8220disposición, 8221 véase la sección 424 (c) y el artículo 1.424-1 (c). Para la definición del término corporación relacionada con 8220, 8221 véase sect1.421-1 (i). C) Fecha de vigencia / aplicabilidad. Los reglamentos de esta sección entran en vigencia el 17 de noviembre de 2009. Los reglamentos de esta sección se aplican a las opciones otorgadas bajo un plan de compra de acciones para empleados a partir del 1 de enero de 2010. Par. 6. La sección 1.423-2 se revisa para que lea como sigue: sect1.423-2 Plan de compra de acciones para empleados definido. (A) En general 8212 (1) El término "plan de compra de acciones para empleados" 8222 significa un plan que cumple con los requisitos de los párrafos (a) (2) y (a) (3) de esta sección. Si los términos del plan no cumplen con los requisitos del párrafo (a) (3) de esta sección, tales requisitos pueden ser satisfechos por los términos de una oferta hecha bajo el plan. Sin embargo, cuando los requisitos del párrafo (a) (3) de esta sección sean satisfechos por los términos de una oferta, dichos requisitos serán tratados como satisfechos solamente con respecto a opciones ejercidas bajo esa oferta. Una o más ofertas pueden hacerse bajo un plan de compra de acciones para empleados. Las ofertas pueden ser consecutivas o solapadas y los términos de cada oferta no tienen por qué ser idénticos siempre que los términos del plan y la oferta juntos cumplan los requisitos de los párrafos (a) (2) y (a) (3) de esta sección. El plan y los términos de una oferta deberán presentarse por escrito o en forma electrónica, siempre que dicha escritura o formulario electrónico sean adecuados para establecer los términos del plan u oferta, según corresponda. (2) To satisfy the requirements of this paragraph (a)(2) and sect1.423-1, the plan must meet both of the following requirements8212 (i) The plan must provide that options can be granted only to employees of the employer corporation or of a related corporation (as defined in paragraph (i) of sect1.421-1) to purchase stock in any such corporation (see paragraph (b) of this section) and (ii) The plan must be approved by the stockholders of the granting corporation within 12 months before or after the date the plan is adopted (see paragraph (c) of this section). (3) To satisfy the requirements of this paragraph (a)(3) and sect1.423-1, the terms of the plan or offering must meet all of the following requirements8212 (i) An employee cannot be granted an option if, immediately after the option is granted, the employee owns stock possessing 5 percent or more of the total combined voting power or value of all classes of stock of the employer corporation or of a related corporation (see paragraph (d) of this section) (ii) Options must be granted to all employees of any corporation whose employees are granted any options by reason of their employment by the corporation (see paragraph (e) of this section) (iii) All employees granted options must have the same rights and privileges (see paragraph (f) of this section) (iv) The option price cannot be less than the lesser of8212 (A) An amount equal to 85 percent of the fair market value of the stock at the time the option is granted, or (B) An amount not less than 85 percent of the fair market value of the stock at the time the option is exercised (see paragraph (g) of this section). (v) Options cannot be exercised after the expiration of8212 (A) Five years from the date the option is granted if, under the terms of such plan, the option price cannot be less than 85 percent of the fair market value of the stock at the time the option is exercised, or (B) Twenty-seven months from the date the option is granted, if the option price is not determined in the manner described in paragraph (a)(3)(v)(A) of this section (see paragraph (h) of this section). (vi) No employee may be granted an option that permits the employee8217s rights to purchase stock under all employee stock purchase plans of the employer corporation and its related corporations to accrue at a rate that exceeds 25,000 of fair market value of the stock (determined at the time the option is granted) for each calendar year in which the option is outstanding at any time (see paragraph (i) of this section) and (vii) Options are not transferable by the optionee other than by will or the laws of descent and distribution, and are exercisable, during the lifetime of the optionee, only by the optionee (see paragraph (j) of this section). (4) The determination of whether a particular option is an option granted under an employee stock purchase plan is made at the time the option is granted. If the terms of an option are inconsistent with the terms of the employee stock purchase plan or the offering under the plan pursuant to which the option is granted, the option will not be treated as granted under an employee stock purchase plan. If an option with terms that are inconsistent with the terms of the plan or an offering under the plan is granted to an employee who is entitled to the grant of an option under the terms of the plan or offering, and the employee is not granted an option under the offering that qualifies as an option granted under an employee stock purchase plan, the offering will not meet the requirements of paragraph (e) of this section. Accordingly, none of the options granted under the offering will be eligible for the special tax treatment of section 421. However, if an option with terms that are inconsistent with the terms of the plan or an offering under the plan is granted to an individual who is not entitled to the grant of an option under the terms of the plan or offering, the option will not be treated as an option granted under an employee stock purchase plan but the grant of the option will not disqualify the options granted under the plan or offering. If, at the time of grant, an option qualifies as an option granted under an employee stock purchase plan, but after the time of grant one or more of the requirements of paragraph (a)(3) of this section is not satisfied with respect to the option, the option will not be treated as granted under an employee stock purchase plan but this failure to comply with the terms of the option will not disqualify the other options granted under the plan or offering. (5) Examples . The following examples illustrate the principles of paragraph (a): Example 1 . Corporation A operates an employee stock purchase plan under which options for A stock are granted to employees of A. The terms of an offering provide that the option price will be 90 percent of the fair market value of A stock on the date of exercise. A grants an option under the offering to Employee Z, an employee of A. The terms of the option provide that the option price will be 85 percent of the fair market value of A stock on the date of exercise. Because the terms of Z8217s option are inconsistent with the terms of the offering, the option granted to Z will not be treated as an option granted under the employee stock purchase plan. Further, unless Z is granted an option under the offering that qualifies as an option granted under the employee stock purchase plan, the offering will not meet the requirements of paragraph (e) of this section and none of the options granted under the offering will be eligible for the special tax treatment of section 421. Example 2 . Corporation B operates an employee stock purchase plan that provides that options for B stock may only be granted to employees of B. Under the terms of the plan, options may not be granted to consultants and other non-employees. B grants an option to Consultant Y, a consultant of B. Because Y is ineligible to receive an option under the plan because Y is not an employee, the grant of the option to Y is inconsistent with the terms of the plan and the option granted to Y will not be treated as an option granted under the employee stock purchase plan. However, the grant of the option to Y will not disqualify the options granted under the plan or any offering because Y was not entitled to the grant of an option under the plan. Example 3 . Corporation C operates an employee stock purchase plan under which options for C stock are granted to employees of C. C grants an option pursuant to an offering under the plan to Employee X, an employee of C who is a highly compensated employee. The terms of the employee stock purchase plan exclude highly compensated employees from participation in the plan. Because X is ineligible to receive an option under the plan by reason of X8217s exclusion from participation in the plan, the option granted to X will not be treated as an option granted under the employee stock purchase plan. However, the grant of the option to X will not disqualify the options granted under the plan or offering because X was not entitled to the grant of an option under the plan. Example 4 . Corporation D operates an employee stock purchase plan under which options for D stock are granted to employees of D. D grants an option pursuant to an offering under the plan to Employee W, an employee of D. The terms of the option provide that the option price will be 90 percent of the fair market value of D stock on the date of exercise. On the date of exercise, W pays only 85 percent of the fair market value of D stock. Because the terms of W8217s option are not satisfied, the option granted to W will not be treated as an option granted under the employee stock purchase plan. However, the failure to comply with the terms of the option granted to W will not disqualify the options granted under the plan or offering. (b) Options restricted to employees . An employee stock purchase plan must provide that options can be granted only to employees of the employer corporation (or employees of its related corporations) to purchase stock in the employer corporation (or one of its related corporations). If such a provision is not included in the terms of the plan, the plan will not be an employee stock purchase plan and options granted under the plan will not qualify for the special tax treatment of section 421. For rules relating to the employment requirement, see sect1.421-1(h). (c) Stockholder approval 8212(1) An employee stock purchase plan must be approved by the stockholders of the granting corporation within 12 months before or after the date such plan is adopted. The approval of the stockholders must comply with all applicable provisions of the corporate charter and bylaws and of applicable State law prescribing the method and degree of stockholder approval required for the issuance of corporate stock or options. If the applicable State law does not prescribe a method and degree of stockholder approval, then an employee stock purchase plan must be approved8212 (i) By a majority of the votes cast at a duly held stockholder8217s meeting at which a quorum representing a majority of all outstanding voting stock is, either in person or by proxy, present and voting on the plan or (ii) By a method and in a degree that would be treated as adequate under applicable State law in the case of an action requiring stockholder approval (such as, an action on which stockholders would be entitled to vote if the action were taken at a duly held stockholders8217 meeting). (2) For purposes of the stockholder approval required by this paragraph (c), ordinarily, a plan is adopted when it is approved by the granting corporation8217s board of directors, and the date of the board8217s action is the reference point for determining whether stockholder approval occurs within the applicable 24-month period. However, if the board8217s action is subject to a condition (such as stockholder approval) or the happening of a particular event, the plan is adopted on the date the condition is met or the event occurs, unless the board8217s resolution fixes the date of adoption as the date of the board8217s action. (3) An employee stock purchase plan, as adopted and approved, must designate the maximum aggregate number of shares that may be issued under the plan, and the corporations or class of corporations whose employees may be offered options under the plan. A plan that merely provides that the number of shares that may be issued under the plan may not exceed a stated percentage of the shares outstanding at the time of each offering or grant under the plan does not satisfy the requirements of this paragraph (c)(3). However, the maximum aggregate number of shares that may be issued under the plan may be stated in terms of a percentage of the authorized, issued, or outstanding shares on the date of the adoption of the plan. The plan may specify that the maximum aggregate number of shares available for grants under the plan may increase annually by a specified percentage of the authorized, issued, or outstanding shares on the date of the adoption of the plan. A plan that provides that the maximum aggregate number of shares that may be issued as options under the plan may change based on any other specific circumstances satisfies the requirements of this paragraph only if the stockholders approve an immediately determinable maximum number of shares that may be issued under the plan in any event. If there is more than one employee stock purchase plan under which options may be granted and stockholders of the granting corporation merely approve a maximum aggregate number of shares that are available for issuance under the plans, the stockholder approval requirements described in paragraph (c)(1) of this section are not satisfied. A separate maximum aggregate number of shares available for issuance pursuant to options must be specified and approved for each plan. (4) Once an employee stock purchase plan is approved by the stockholders of the granting corporation, the plan need not be reapproved by the stockholders of the granting corporation unless the plan is amended or changed in a manner that is considered the adoption of a new plan, in which case the plan must be reapproved within the prescribed 24-month period. Any increase in the aggregate number of shares that may be issued under the plan (other than an increase merely reflecting a change in the number of outstanding shares, such as a stock dividend or stock split) will be considered the adoption of a new plan requiring stockholder approval within the prescribed 24-month period. Similarly, a change in the designation of corporations whose employees may be offered options under the plan will be considered the adoption of a new plan requiring stockholder approval within the prescribed 24-month period unless the plan provides that designations of participating corporations may be made from time to time from among a group consisting of the granting corporation and its related corporations. The group from among which such changes and designations are permitted without additional stockholder approval may include corporations having become parents or subsidiaries of the granting corporation after the adoption and approval of the plan. In addition, a change in the granting corporation or the stock available for purchase under the plan will be considered the adoption of a new plan requiring stockholder approval within the prescribed 24-month period. Any other changes in the terms of an employee stock purchase plan are not considered the adoption of a new plan and, thus, do not require stockholder approval. (5) Examples . The following examples illustrate the principles of this paragraph (c): Example 1 . (i) Corporation E is a subsidiary of Corporation F, a publicly traded corporation. On January 1, 2010, E adopts an employee stock purchase plan under which options for E stock are granted to E employees. (ii) To meet the requirements of paragraph (c)(1) of this section, the plan must be approved by the stockholders of E (in this case, F) within 12 months before or after January 1, 2010. (iii) Assume the same facts as in paragraph (i) of this Example 1 . except that the plan was approved by the stockholders of E (in this case, F) on March 1, 2010. On January 1, 2012, E changes the plan to provide that options for F stock will be granted to E employees under the plan. Because there is a change in the stock available for grant under the plan, under paragraph (c)(4) of this section, the change is considered the adoption of a new plan that must be approved by the stockholders of E (in this case, F) within 12 months before or after January 1, 2012. Example 2 . (i) Assume the same facts as in paragraph (i) of Example 1 . except that on March 15, 2011, F completely disposes of its interest in E. Thereafter, E continues to grant options for E stock to E employees under the plan. (ii) The new E options are granted under a plan that meets the stockholder approval requirements of paragraph (c)(1) of this section without regard to whether E seeks approval of the plan from the stockholders of E after F disposes of its interest in E. (iii) Assume the same facts as in paragraph (i) of this Example 2 . except that under the plan as adopted on January 1, 2010, only options for F stock are granted to E employees. Assume further that, after F disposes of its interest in E, E changes the plan to provide for the grant of options for E stock to E employees. Because there is a change in the stock available for purchase or grant under the plan, under paragraph (c)(4) of this section, the stockholders of E must approve the plan within 12 months before or after the change to the plan to meet the stockholder approval requirements of paragraph (c) of this section. Example 3 . (i) Corporation G maintains an employee stock purchase plan providing options for G stock. Corporation H does not maintain an employee stock purchase plan. On May 15, 2010, G and H consolidate under State law to form one corporation. The new corporation is named Corporation H. The consolidation agreement describes the G plan, including the maximum aggregate number of shares available for issuance under the plan after the consolidation. Additionally, the consolidation agreement states that the plan will be continued by H after the consolidation. The consolidation agreement is approved by the stockholders of G and H on May 1, 2010. H assumes the plan formerly maintained by G and continues to grant options under the plan to all eligible employees, but the options are for H stock. (ii) Because there is a change in the granting corporation (from G to H) and the stock available for purchase, under paragraph (c)(4) of this section, H is considered to have adopted a new plan. Because the plan is fully described in the consolidation agreement, including the maximum aggregate number of shares available for issuance under the plan, the approval of the consolidation agreement by the stockholders constitutes approval of the plan. Thus, the stockholder approval of the consolidation agreement satisfies the stockholder approval requirements of paragraph (c)(1) of this section, and the plan is considered to be adopted by H and approved by its stockholders on May 1, 2010. Example 4 . Corporation I adopts an employee stock purchase plan on November 1, 2010. On that date, there are two million shares of I stock outstanding. The plan provides that the maximum aggregate number of shares that may be issued under the plan may not exceed 15 percent of the number of shares of I stock outstanding on November 1, 2010. Because the maximum aggregate number of shares that may be issued under the plan is designated in the plan, the requirements of paragraph (c)(3) of this section are met. Example 5 . (i) Corporation J adopts an employee stock purchase plan on March 15, 2010. The plan provides that the maximum aggregate number of shares of J stock available for issuance under the plan is 50,000, increased on each anniversary date of the adoption of the plan by 5 percent of the then outstanding shares. Because the maximum aggregate number of shares is not designated under the plan, the requirements of paragraph (c)(3) of this section are not met. (ii) Assume the same facts as in paragraph (i) of this Example 5 . except that the plan provides that the maximum aggregate number of shares available under the plan is the lesser of (a) 50,000 shares, increased each anniversary date of the adoption of the plan by 5 percent of the then-outstanding shares, or (b) 200,000 shares. Because the maximum aggregate number of shares that may be issued under the plan is designated as the lesser of two numbers, one of which provides an immediately determinable maximum aggregate number of shares that may be issued under the plan in any event, the requirements of paragraph (c)(3) of this section are met. (d) Options granted to certain shareholders 8212(1) An employee stock purchase plan or offering must, by its terms, provide that an employee cannot be granted an option if the employee, immediately after the option is granted, owns stock possessing 5 percent or more of the total combined voting power or value of all classes of stock of the employer corporation or a related corporation. In determining whether the stock ownership of an employee equals or exceeds this 5 percent limit, the rules of section 424(d) (relating to attribution of stock ownership) shall apply, and stock that the employee may purchase under outstanding options (whether or not the options qualify for the special tax treatment afforded by section 421(a)) shall be treated as stock owned by the employee. An option is outstanding for purposes of this paragraph (d) although under its terms it may be exercised only in installments or after the expiration of a fixed period of time. If an option is granted to an employee whose stock ownership (as determined under this paragraph (d)) exceeds the limitation set forth in this paragraph (d), no portion of the option will be treated as having been granted under an employee stock purchase plan. (2) The determination of the percentage of the total combined voting power or value of all classes of stock of the employer corporation (or a related corporation) that is owned by the employee is made by comparing the voting power or value of the shares owned (or treated as owned) by the employee to the aggregate voting power or value of all shares actually issued and outstanding immediately after the grant of the option to the employee. The aggregate voting power or value of all shares actually issued and outstanding immediately after the grant of the option does not include the voting power or value of treasury shares or shares authorized for issue under outstanding options held by the employee or any other person. (3) Examples . The following examples illustrate the principles of this paragraph (d): Example 1 . Employee V, an employee of Corporation K, owns 6,000 shares of K common stock, the only class of K stock outstanding. K has 100,000 shares of its common stock outstanding. Because V owns 6 percent of the combined voting power or value of all classes of K stock, K cannot grant an option to V under K8217s employee stock purchase plan. If V8217s father and brother each owned 3,000 shares of K stock and V did not own any K stock, then the result would be the same because, under section 424(d), an individual is treated as owning stock held by the person8217s father and brother. Similarly, the result would be the same if, instead of actually owning 6,000 shares, V merely held an option on 6,000 shares of K stock, irrespective of whether the transfer of stock under the option could qualify for the special tax treatment of section 421, because this paragraph (d) provides that stock the employee may purchase under outstanding options is treated as stock owned by such employee. Example 2 . Assume the same facts as in Example 1 . except that K is a 50 percent subsidiary corporation of Corporation L. Irrespective of whether V owns any L stock, V cannot receive an option from L under L8217s employee stock purchase plan because he owns 5 percent of the total combined voting power of all classes of stock of a subsidiary of L, in this example, K. An employee who owns (or is treated as owning) stock in excess of the limitation of this paragraph (d), in any corporation in a group of related corporations, consisting of a parent and its subsidiary corporations, cannot receive an option under an employee stock purchase plan from any corporation in the group. Example 3 . Employee U is an employee of Corporation M. M has only one class of stock, of which 100,000 shares are issued and outstanding. Assuming U does not own (and is not treated as owning) any stock in M or in any related corporation of M, M may grant an option to U under its employee stock purchase plan for 4,999 shares, because immediately after the grant of the option, U would not own 5 percent or more of the combined voting power or value of all classes of M stock actually issued and outstanding at such time. The 4,999 shares that U would be treated as owning under this paragraph (d) would not be added to the 100,000 shares actually issued and outstanding immediately after the grant for purposes of determining whether U8217s stock ownership exceeds the limitation of this paragraph (d). Example 4 . Assume the same facts as in Example 3 but instead of an option for 4,999 shares, M grants U an option, purportedly under its employee stock purchase plan, for 5,000 shares. No portion of this option will be treated as granted under an employee stock purchase plan because U8217s stock ownership exceeds the limitation of this paragraph (d). (e) Employees covered by plan 8212(1) Subject to the provisions of this paragraph (e) and the limitations of paragraphs (d), (f) and (i) of this section, an employee stock purchase plan or offering must, by its terms, provide that options are to be granted to all employees of any corporation whose employees are granted any of such options by reason of their employment by that corporation, except that one or more of the following categories of employees may be excluded from the coverage of the plan or offering8212 (i) Employees who have been employed less than two years (ii) Employees whose customary employment is 20 hours or less per week (iii) Employees whose customary employment is for not more than five months in any calendar year and (iv) Highly compensated employees (within the meaning of section 414(q)). (2) A plan or offering does not fail to satisfy the coverage provision of paragraph (e)(1) of this section in the following circumstances8212 (i) The plan or offering excludes employees who have completed a shorter period of service or whose customary employment is for fewer hours per week or fewer months in a calendar year than is specified in paragraphs (e)(1)(i), (ii) and (iii) of this section, provided the exclusion is applied in an identical manner to all employees of every corporation whose employees are granted options under the plan or offering. (ii) The plan or offering excludes highly compensated employees (within the meaning of section 414(q)) with compensation above a certain level or who are officers or subject to the disclosure requirements of section 16(a) of the Securities Exchange Act of 1934, provided the exclusion is applied in an identical manner to all highly compensated employees of every corporation whose employees are granted options under the plan or offering. (3) Notwithstanding paragraph (e)(1) of this section, employees who are citizens or residents of a foreign jurisdiction (without regard to whether they are also citizens of the United States or resident aliens (within the meaning of section 7701(b)(1)(A))) may be excluded from the coverage of an employee stock purchase plan or offering under the following circumstances8212 (i) The grant of an option under the plan or offering to a citizen or resident of the foreign jurisdiction is prohibited under the laws of such jurisdiction or (ii) Compliance with the laws of the foreign jurisdiction would cause the plan or offering to violate the requirements of section 423. (4) No option granted under a plan or offering that excludes from participation any employees, other than those who may be excluded under this paragraph (e), and those barred from participation by reason of paragraphs (d), (f) and (i) of this section, can be regarded as having been granted under an employee stock purchase plan. If an option is not granted to any employee who is entitled to the grant of an option under the terms of the plan or offering, none of the options granted under such offering will be treated as having been granted under an employee stock purchase plan. However, a plan that, by its terms, permits all eligible employees to elect to participate in an offering will not violate the requirements of this paragraph solely because eligible employees who elect not to participate in the offering are not granted options pursuant to such offering. (5) For purposes of this paragraph (e), the existence of the employment relationship between an individual and the corporation participating under the plan will be determined under sect1.421-1(h). (6) Examples . The following examples illustrate the principles of this paragraph (e): Example 1 . Corporation N has a stock purchase plan that meets all the requirements of paragraphs (a)(2) and (a)(3) of this section except that options are not required to be granted to employees whose weekly rate of pay is less than 1,000. As a matter of corporate practice, however, N grants options under its plan to all employees, irrespective of their weekly rate of pay. Even though N8217s plan is operated in compliance with the requirements of this paragraph (e), N8217s plan is not an employee stock purchase plan because the terms of the plan exclude a category of employees that is not permitted under this paragraph (e). Example 2 . Assume the same facts as in Example 1 . except that the first offering under N8217s plan provides that options will be granted to all employees of N. The terms of the first offering will be treated as part of the terms of N8217s plan, but only for purposes of the first offering. Because the terms of the first offering satisfy the requirements of this paragraph (e), stock transferred pursuant to options exercised under the first offering will be treated as stock transferred pursuant to the exercise of options granted under an employee stock purchase plan for purposes of section 421. Example 3 . Corporation O has a stock purchase plan that excludes from participation all employees who have been employed less than one year. Assuming all other requirements of paragraphs (a)(2) and (a)(3) of this section are satisfied, O8217s plan qualifies as an employee stock purchase plan under section 423. Example 4 . Corporation P has a stock purchase plan that excludes from participation clerical employees who have been employed less than two years. However, non-clerical employees with less than two years of service are permitted to participate in the plan. P8217s plan is not an employee stock purchase plan because the exclusion of employees who have been employed less than two years applies only to certain employees of P and is not applied in an identical manner to all employees of P. If, instead, P8217s plan excludes from participation all employees (both clerical and non-clerical) who have been employed less than two years, then P8217s plan would qualify as an employee stock purchase plan under section 423 assuming all other requirements of paragraphs (a)(2) and (a)(3) of this section are satisfied. Example 5 . Corporation Q has a stock purchase plan that excludes from participation all officers who are highly compensated employees (within the meaning of section 414(q)). Assuming all other requirements of paragraphs (a)(2) and (a)(3) of this section are satisfied, Q8217s plan qualifies as an employee stock purchase plan under section 423. Example 6 . Corporation R maintains an employee stock purchase plan that excludes from participation all highly compensated employees (within the meaning of section 414(q)), except highly compensated employees who are officers of R. R8217s plan is not an employee stock purchase plan because the exclusion of all highly compensated employees except highly compensated employees who are officers of R is not a permissible exclusion under paragraph (e)(2)(ii) of this section. Example 7 . Corporation S is the parent corporation of Subsidiary YY and Subsidiary ZZ. S maintains an employee stock purchase plan with both YY and ZZ participating in the same offering under the plan. Under the terms of the offering under the plan, all employees of YY and ZZ are permitted to participate in the plan with the exception of ZZ8217s highly compensated employees with annual compensation greater than 300,000. None of the options granted under the offering will be considered granted under an employee stock purchase plan because the exclusion of highly compensated employees with annual compensation greater than 300,000 is not applied in an identical manner to all employees of YY and ZZ granted options in the same offering. Example 8 . Assume the same facts as in Example 7 . except that Corporation S establishes separate offerings under the plan for YY and ZZ. Under the terms of the separate offering for YY, all employees of YY are permitted to participate in the plan. Under the terms of the separate offering established for ZZ, all employees of ZZ are permitted to participate in the plan with the exception of ZZ8217s highly compensated employees with annual compensation greater than 300,000. The options granted under the separate offering for YY will be considered granted under an employee stock purchase plan. Further, the options granted under the separate offering for ZZ will be considered granted under an employee stock purchase plan because the exclusion of highly compensated employees with annual compensation greater than 300,000 is applied in an identical manner to all employees of ZZ granted options in the same offering. Example 9 . The laws of Country A require that options granted to residents of Country A be transferable during the lifetime of the option recipient. Corporation T has a stock purchase plan that excludes residents of Country A from participation in the plan. Because compliance with the laws of Country A would cause options granted to residents of Country A to violate paragraph (j) of this section, T may exclude residents of Country A from participation in the plan. Assuming all other requirements of paragraph (a)(2) of this section are satisfied, T8217s plan qualifies as an employee stock purchase plan under section 423. (f) Equal rights and privileges 8212(1) Except as otherwise provided in paragraphs (f)(2) through (f)(6) of this section, an employee stock purchase plan or offering must, by its terms, provide that all employees granted options under the plan or offering shall have the same rights and privileges. Thus, the provisions applying to one option under an offering (such as the provisions relating to the method of payment for the stock and the determination of the purchase price per share) must apply to all other options under the offering in the same manner. If all the options granted under a plan or offering do not, by their terms, give the respective optionees the same rights and privileges, none of the options will be treated as having been granted under an employee stock purchase plan for purposes of section 421. (2) The requirements of this paragraph (f) do not prevent the maximum amount of stock that an employee may purchase from being determined on the basis of a uniform relationship to the total compensation, or the basic or regular rate of compensation, of all employees. (3) A plan or offering will not fail to satisfy the requirements of this paragraph (f) because the plan or offering provides that no employee may purchase more than a maximum amount of stock fixed under the plan or offering. (4) A plan or offering will not fail to satisfy the requirements of this paragraph (f) if, in order to comply with the laws of a foreign jurisdiction, the terms of an option granted under a plan or offering to citizens or residents of such foreign jurisdiction (without regard to whether they are also citizens of the United States or resident aliens (within the meaning of section 7701(b)(1)(A))) are less favorable than the terms of options granted under the same plan or offering to employees resident in the United States. (5)(i) Except as provided in this paragraph and paragraph (f)(5)(ii) of this section, a plan or offering permitting one or more employees to carry forward amounts that were withheld but not applied toward the purchase of stock under an earlier plan or offering and apply the amounts towards the purchase of additional stock under a subsequent plan or offering will be a violation of the equal rights and privileges under paragraph (f)(1) of this section. However, the carry forward of amounts withheld but not applied toward the purchase of stock under an earlier plan or offering will not violate the equal rights and privileges requirement of paragraph (f)(1) of this section, if all other employees participating in the current plan or offering are permitted to make direct payments toward the purchase of shares under a subsequent plan or offering in an amount equal to the excess of the greatest amount which any employee is allowed to carry forward from an earlier plan or offering over the amount, if any, the employee will carry forward from an earlier plan or offering. (ii) A plan or offering will not fail to satisfy the requirements of this section merely because employees are permitted to carry forward amounts representing a fractional share, that were withheld but not applied toward the purchase of stock under an earlier plan or offering and apply the amounts toward the purchase of additional stock under a subsequent plan or offering. (6) Paragraph (f) does not prohibit the delaying of the grant of an option to any employee who is barred from being granted an option solely by reason of the employee8217s failing to meet a minimum service requirement set forth in paragraph (e)(1) of this section until the employee meets such requirement. (7) Examples . The following examples illustrate the principles of this paragraph (f): Example 1 . Corporation U has an employee stock purchase plan that provides that the maximum amount of stock that each employee may purchase under the offering is one share for each 100 of annual gross pay. The plan meets the requirements of this paragraph (f). Example 2 . Corporation V has an employee stock purchase plan that provides that the maximum amount of stock that each employee may purchase under the offering is one share for each 100 of annual gross pay up to and including 10,000, and two shares for each 100 of annual gross pay in excess of 10,000. The plan will not meet the requirements of this paragraph (f) because the amount of stock that may be purchased under the plan is not based on a uniform relationship to the total compensation of all employees. Example 3 . Corporation W has an employee stock purchase plan that provides that options to purchase stock in an amount equal to ten percent of an employee8217s annual salary at a price equal to 85 percent of the fair market value on the first day of the offering will be granted to all employees other than those who have been employed less than 18 months. In addition, the plan provides that employees who have not yet met the minimum service requirements on the first day of the offering will be granted similar options on the date the 18 month service requirement has been attained. The plan meets the requirements of this paragraph (f). Example 4 . Corporation X is the parent corporation of Subsidiary AA, Subsidiary BB and Subsidiary CC. X maintains an employee stock purchase plan with AA, BB and CC participating in the same offering under the plan. Under the terms of the offering under the plan, options to purchase stock at a price equal to 90 percent of the fair market value at the time the option is exercised will be granted to all employees. Certain employees of AA are residents of Country B. The laws of Country B provide that options granted to employees who are residents of Country B must have a purchase price not less than 95 percent of the fair market value at the time the option is exercised. The plan will not fail to satisfy the requirements of this paragraph (f) merely because the residents of Country B are granted options under the plan to purchase stock at a price equal to 95 percent of the fair market value at the time the option is exercised. Example 5 . Assume the same facts as in Example 4 . except that Corporation X establishes two separate offerings under the plan: a separate offering for the employees of AA and a separate offering for the employees of BB and CC. Under the separate offering for the employees of BB and CC, options are granted to all employees with an exercise price equal to 90 percent of the fair market value at the time the option is exercised. Under the separate offering for the employees of AA, options are granted to all employees with an exercise price equal to 95 percent of the fair market value at the time the option is exercised. The plan does not violate the equal rights and privileges requirement of this paragraph (f) merely because the exercise price of options granted under one offering is less than the exercise price of options granted under a separate offering. Example 6 . Corporation Y maintains an employee stock purchase plan. Employee T is employed by Y. T is granted an option under the current offering to purchase a maximum of 100 shares of Y stock at an option price equal to 85 percent of the fair market value of the stock at exercise. The plan permits the carry forward of withheld but unused amounts from an earlier offering. Prior to the exercise date, 2000 of T8217s salary has been withheld and is available to be applied toward the purchase of Y stock. On the exercise date, the fair market value of Y stock is 20 per share. T is able to purchase 100 shares of Y stock at 17 per share for an aggregate purchase price of 1700. T can carry forward 300 to the subsequent offering. Each employee in the subsequent offering other than T will be permitted to make direct payments toward the purchase of shares under the subsequent offering in a maximum amount of 300 less any amount the employee has carried forward from an earlier offering. The plan does not violate the equal rights and privileges requirement of this paragraph (f). (g) Option price 8212(1) An employee stock purchase plan or offering must, by its terms, provide that the option price will not be less than the lesser of8212 (i) An amount equal to 85 percent of the fair market value of the stock at the time the option is granted, or (ii) An amount that under the terms of the option may not be less than 85 percent of the fair market value of the stock at the time the option is exercised. (2) For purposes of determining the option price, the fair market value of the stock may be determined in any reasonable manner, including the valuation methods permitted under sect20.2031-2. However, the option price must meet the minimum pricing requirements of this paragraph (g). For general rules relating to the option price, see sect1.421-1(e). For rules relating to the determination of when an option is granted, see sectsect1.421-1(c) and 1.423-2(h)(2). Any option that does not meet the minimum pricing requirements of this paragraph (g) will not be treated as an option granted under an employee stock purchase plan irrespective of whether the plan or offering satisfies those requirements. If an option that does not meet the minimum pricing requirements is granted to an employee who is entitled to the grant of an option under the terms of the plan or offering, and the employee is not granted an option under such offering that qualifies as an option granted under an employee stock purchase plan, the offering will not meet the requirements of paragraph (e) of this section. Accordingly, none of the options granted under the offering will be eligible for the special tax treatment of section 421. (3) The option price may be stated either as a percentage or as a dollar amount. If the option price is stated as a dollar amount, then the requirement of this paragraph (g) can only be met by a plan or offering in which the price is fixed at not less than 85 percent of the fair market value of the stock at the time the option is granted. If the fixed price is less than 85 percent of the fair market value of the stock at grant, then the option cannot meet the requirement of this paragraph (g) even if a decline in the fair market value of the stock results in such fixed price being not less than 85 percent of the fair market value of the stock at the time the option is exercised, because that result was not certain to occur under the terms of the option. (4) Examples . The following examples illustrate the principles of this paragraph (g): Example 1 . Corporation Z has an employee stock purchase plan that provides that the option price will be 85 percent of the fair market value of the stock on the first day of the offering (which is the date of grant in this case), or 85 percent of the fair market value of the stock at exercise, whichever amount is the lesser. Upon the exercise of an option issued under Z8217s plan, Z agrees to accept an option price that is less than the minimum amount allowable under the terms of such plan. Notwithstanding that the option was issued under an employee stock purchase plan, the transfer of stock pursuant to the exercise of such option does not satisfy the requirement of this paragraph (g) and cannot qualify for the special tax treatment of section 421. Example 2 . Corporation AA has an employee stock purchase plan that provides that the option price is set at 85 percent of the fair market value of AA stock at exercise, but not less than 80 per share. On the first day of the offering (which is the date of grant in this case), the fair market value of AA stock is 100 per share. The option satisfies the requirement of this paragraph (g), and can qualify for the special tax treatment of section 421. Example 3 . Assume the same facts as in Example 2 . except that the option price is set at 85 percent of the fair market value of AA stock at exercise, but not more than 80 per share. This option cannot satisfy the requirement of this paragraph (g) irrespective of whether, at the time the option is exercised, 85 percent of the fair market value of AA stock is 80 or less. (h) Option period 8212(1) An employee stock purchase plan or offering must, by its terms, provide that options granted under the plan cannot be exercised after the expiration of 27 months from the date of grant unless, under the terms of the plan or offering, the option price is not less than 85 percent of the fair market value of the stock at the time of the exercise of the option. If the option price is not less than 85 percent of the fair market value of the stock at the time the option is exercised, then the option period provided under the plan must not exceed five years from the date of grant. If the requirements of this paragraph (h) are not met by the terms of the plan or offering, then options issued under such plan or offering will not be treated as options granted under an employee stock purchase plan irrespective of whether the options, by their terms, are exercisable beyond the period allowable under this paragraph (h). An option that provides that the option price is not less than 85 percent of the fair market value of the stock at exercise may have an option period of 5 years irrespective of whether the fair market value of the stock at exercise is more or less than the fair market value of the stock at grant. However, if the option provides that the option price is 85 percent of the fair market value of the stock at exercise, but not more than some other fixed amount determined in accordance with the provisions of paragraph (g) of this section, then irrespective of the price paid on exercise, the option period must not be more than 27 months. (2) Section 1.421-1(c) provides that, for purposes of sectsect1.421-1 through 1.424-1, the language 8220the date of the granting of the option8221 and the 8220time such option is granted,8221 and similar phrases refer to the date or time when the granting corporation completes the corporate action constituting an offer of stock for sale to an individual under the terms and conditions of a statutory option. With respect to options granted under an employee stock purchase plan, the principles of sect1.421-1(c) shall be applied without regard to the requirement that the minimum option price must be fixed or determinable in order for the corporate action constituting an offer of stock to be considered complete. (3) The date of grant will be the first day of an offering if the terms of an employee stock purchase plan or offering designate a maximum number of shares that may be purchased by each employee during the offering. Similarly, the date of grant will be the first day of an offering if the terms of the plan or offering require the application of a formula to establish, on the first day of the offering, the maximum number of shares that may be purchased by each employee during the offering. It is not required that an employee stock purchase plan or offering designate a maximum number of shares that may be purchased by each employee during the offering or incorporate a formula to establish a maximum number of shares that may be purchased by each employee during the offering. If the maximum number of shares that can be purchased under an option is not fixed or determinable until the date the option is exercised, then the date of exercise will be the date of grant of the option. (4) Examples . The following examples illustrate the principles of this paragraph (h): Example 1 . (i) Corporation BB has an employee stock purchase plan that provides that the option price will be the lesser of 85 percent of the fair market value of the stock on the first day of an offering or 85 percent of the fair market value of the stock on the last day of the offering. Options are exercised on the last day of the offering. One million shares of BB stock are reserved for issuance under the plan. The plan provides that no employee may be permitted to purchase stock under the plan at a rate that exceeds 25,000 in fair market value of the BB stock (determined on the date of grant) for each calendar year during which an option granted to the employee is outstanding. The terms of each option granted under an offering provide that a maximum of 500 shares may be purchased by the option recipient during the offering. Because the maximum number of shares that can be purchased under the option is fixed and determinable on the first day of the offering, the date of grant for the option is the first day of the offering. (ii) Assume the same facts as in paragraph (i) of Example 1 . except that BB8217s plan excludes all employees who have been employed less than 18 months. The plan provides that employees who have not yet met the minimum service requirements on the first day of an offering will be granted an option on the date the 18-month service requirement has been attained. With respect to those employees who have been employed less than 18 months on the first day of an offering, the date of grant for the option is the date the 18-month service requirement has been attained. Example 2 . Assume the same facts as in paragraph (i) of Example 1 . except that the terms of each option granted do not provide that a maximum of 500 shares may be purchased by the option recipient during the offering. Notwithstanding the fixed number of shares reserved for issuance under the plan and the 25,000 limitation set forth in the plan, the maximum number of shares that can be purchased under the option is not fixed or determinable until the last day of the offering when the option is exercised. Therefore the date of grant for the option is the last day of the offering when the option is exercised. Example 3 . Corporation CC has an employee stock purchase plan that provides that the option price will be 85 percent of the fair market value of the stock on the last day of the offering. Options are exercised on the last day of the offering. Each offering under the plan begins on January 1 and ends on December 31 of the same calendar year. The terms of each option granted under an offering provide that the maximum number of shares that may be purchased by any employee during the offering equals 25,000 divided by the fair market value of the stock on the first day of the offering. The maximum number of shares that can be purchased under the option is fixed and determinable on the first day of the offering and therefore the date of grant for the option is the first day of the offering. Example 4 . Assume the same facts as in Example 3 except that the terms of each option granted under an offering provide that the maximum number of shares that may be purchased by any employee during the offering equals 10 percent of the employee8217s annual salary (determined as of January 1 of the year in which the offering commences) divided by the fair market value of the stock on the first day of the offering. The maximum number of shares that can be purchased under the option is fixed and determinable on the first day of the offering and therefore the date of grant for the option is the first day of the offering. (i) Annual 25,000 limitation 8212(1) An employee stock purchase plan or offering must, by its terms, provide that no employee may be permitted to purchase stock under all the employee stock purchase plans of the employer corporation and its related corporations at a rate that exceeds 25,000 in fair market value of the stock (determined at the time the option is granted) for each calendar year in which any option granted to the employee is outstanding at any time. In applying the foregoing limitation8212 (i) The right to purchase stock under an option accrues when the option (or any portion thereof) first becomes exercisable during the calendar year (ii) The right to purchase stock under an option accrues at the rate provided in the option, but in no case may such rate exceed 25,000 of fair market value of such stock (determined at the time such option is granted) for any one calendar year and (iii) A right to purchase stock that has accrued under one option granted pursuant to the plan may not be carried over to any other option. (2) If an option is granted under an employee stock purchase plan that satisfies the requirement of this paragraph (i), but the option gives the optionee the right to buy stock in excess of the maximum rate allowable under this paragraph (i), then no portion of the option will be treated as having been granted under an employee stock purchase plan. Furthermore, if the option was granted to an employee entitled to the grant of an option under the terms of the plan or offering, and the employee is not granted an option under the offering that qualifies as an option granted under an employee stock purchase plan, then the offering will not meet the requirements of paragraph (e) of this section. Accordingly, none of the options granted under the offering will be eligible for the special tax treatment of section 421. (3) The limitation of this paragraph (i) applies only to options granted under employee stock purchase plans and does not limit the amount of stock that an employee may purchase under incentive stock options (as defined in section 422(b)) or any other stock options except those to which section 423 applies. Stock purchased under options to which section 423 does not apply will not limit the amount that an employee may purchase under an employee stock purchase plan, except for purposes of the 5-percent stock ownership provision of paragraph (d) of this section. (4) Under the limitation of this paragraph (i), an employee may purchase up to 25,000 of stock (based on the fair market value of the stock at the time the option was granted) in each calendar year during which an option granted to the employee under an employee stock purchase plan is outstanding. Alternatively, an employee may purchase more than 25,000 of stock (based on the fair market value of such stock at the time the option was granted) in a calendar year, so long as the total amount of stock that the employee purchases does not exceed 25,000 in fair market value of the stock (determined at the time the option was granted) for each calendar year in which any option was outstanding. If, in any calendar year, the employee holds two or more outstanding options granted under employee stock purchase plans of the employer corporation, or a related corporation, then the employee8217s purchases of stock attributable to that year under all options granted under employee stock purchase plans must not exceed 25,000 in fair market value of the stock (determined at the time the options were granted). Under an employee stock purchase plan, an employee may not purchase stock in anticipation that the option will be outstanding in some future year. Thus, the employee may purchase only the amount of stock that does not exceed the limitation of this paragraph (i) for the year of the purchase and for preceding years during which the option was outstanding. Thus, the amount of stock that may be purchased under an option depends on the number of years in which the option is actually outstanding. The amount of stock that may be purchased under an employee stock purchase plan may not be increased by reason of the failure to grant an option in an earlier year under such plan, or by reason of the failure to exercise an earlier option. For example, if an option is granted to an individual and expires without having been exercised at all, then the failure to exercise the option does not increase the amount of stock which such individual may be permitted to purchase under an option granted in a year following the year of such expiration. If an option granted under an employee stock purchase plan is outstanding in more than one calendar year, then stock purchased pursuant to the exercise of such an option will be applied first, to the extent allowable under this paragraph (i), against the 25,000 limitation for the earliest year in which the option was outstanding, then, against the 25,000 limitation for each succeeding year, in order. (5) Examples . The following examples illustrate the principles of this paragraph (i): Example 1 . Assume that Corporation DD maintains an employee stock purchase plan and that Employee S is employed by DD. On June 1, 2010, DD grants S an option under the plan to purchase a total of 750 shares of DD stock at 85 per share. On that date, the fair market value of DD stock is 100 per share. The option provides that it may be exercised at any time but cannot be exercised after May 31, 2012. Under this paragraph (i), the option must not permit S to purchase more than 250 shares of DD stock during the calendar year 2010, because 250 shares are equal to 25,000 in fair market value of DD stock determined at the time of grant. During the calendar year 2011, S may purchase under the option an amount of DD stock equal to the difference between 50,000 in fair market value of DD stock (determined at the time the option was granted) and the fair market value of DD stock (determined at the time of grant of the option) purchased during the year 2010. During the calendar year 2012, S may purchase an amount of DD stock equal to the difference between 75,000 in fair market value of the stock (determined at the time of grant of the option) and the total amount of the fair market value of the stock (determined at the time of grant of the option) purchased under the option during the calendar years 2010 and 2011. S may purchase 25,000 of stock for the year 2010, and 25,000 of stock for the year 2012, although the option was outstanding for only a part of each of such years. However, S may not be granted another option under an employee stock purchase plan of DD or a related corporation to purchase stock of DD or a related corporation during the calendar years 2010, 2011, and 2012, so long as the option granted June 1, 2010, is outstanding. Example 2 . Assume the same facts as in Example 1 . except that the option granted to S in 2010 is terminated in 2011 without any part of the option having been exercised, and that subsequent to the termination and during 2011, S is granted another option under DD8217s employee stock purchase plan. Under that option, S may be permitted to purchase 25,000 of stock for 2011. The failure of S to exercise the option granted to S in 2010, does not increase the amount of stock that S may be permitted to purchase under the option granted to S in 2011. Example 3 . Assume the same facts as in Example 1 . except that, on May 31, 2012, S exercised the option granted to S in 2010, and purchased 600 shares of DD stock. Five hundred shares, the maximum amount of stock that could have been purchased in 2011, under the option, are treated as having been purchased for the years 2010 and 2011. Only 100 shares of the stock are treated as having been purchased for 2012. After S8217s exercise of the option on May 31, 2012, S is granted another option under DD8217s employee stock purchase plan. S may be permitted under the new option to purchase for 2012 stock having a fair market value of no more than 15,000 at the time the new option is granted. Example 4 . Corporation EE maintains an employee stock purchase plan and Employee R is employed by EE. On August 1, 2010, EE grants R an option under the plan to purchase 150 shares of EE stock at 85 per share during each of the calendar years 2010, 2011, and 2012. On that date, the fair market value of EE stock is 100 per share. The option provides that it may be exercised at any time during years 2010, 2011, and 2012. Because this option permits R to purchase only 15,000 of EE8217s stock for each year the option is outstanding, R could be granted another option by EE, or by a related corporation, in year 2010, permitting R to purchase an additional 10,000 of stock during each of the calendar years 2010, 2011, and 2012. Example 5 . Corporation FF maintains an employee stock purchase plan and Employee Q is employed by FF. On September 1, 2010, FF grants Q an option under the plan that will be automatically exercised on August 31, 2011, and August 31, 2012. The terms of the option provide that no more than 150 shares may be purchased on each date that the option is automatically exercised. On August 31, 2011, Q may purchase under the option an amount of FF stock equal to 50,000 in fair market value of FF stock (determined at the time the option was granted). On August 31, 2012, Q may purchase under the option an amount of FF stock equal to the difference between 75,000 in fair market value of FF stock (determined at the time the option was granted) and the fair market value of FF stock (determined at the time of grant of the option) purchased during year 2011. (j) Restriction on transferability . An employee stock purchase plan or offering must, by its terms, provide that options granted under the plan are not transferable by the optionee other than by will or the laws of descent and distribution, and must be exercisable, during the optionee8217s lifetime, only by the optionee. For general rules relating to the restriction on transferability required by this paragraph (j), see sect1.421-1(b)(2). For a limited exception to the requirement of this paragraph (j), see section 424(h)(3). (k) Special rule where option price is between 85 percent and 100 percent of value of stock 8212(1)(i) If all the conditions necessary for the application of section 421(a) exist, this paragraph (k) provides additional rules that are applicable in cases where, at the time the option is granted, the option price per share is less than 100 percent (but not less than 85 percent) of the fair market value of the share. In that case, upon the disposition of the share by the employee after the expiration of the two-year and the one-year holding periods, or upon the employee8217s death while owning the share (whether occurring before or after the expiration of such periods), there shall be included in the employee8217s gross income as compensation (and not as gain upon the sale or exchange of a capital asset) the lesser of8212 (a) The amount, if any, by which the price paid under the option was exceeded by the fair market value of the share at the time the option was granted, or (b) The amount, if any, by which the price paid under the option was exceeded by the fair market value of the share at the time of such disposition or death. (ii) For purposes of applying the rules of this paragraph (k), if the option price is not fixed or determinable at the time the option is granted, the option price will be computed as if the option had been exercised at such time. The amount of compensation resulting from the application of this paragraph (k) shall be included in the employee8217s gross income for the taxable year in which the disposition occurs, or for the taxable year closing with the employee8217s death, whichever event results in the application of this paragraph (k). (iii) The application of the special rules provided in this paragraph (k) shall not affect the rules provided in section 421(a) with respect to the employee exercising the option, the employer corporation, or a related corporation. Thus, notwithstanding the inclusion of an amount as compensation in the gross income of an employee, as provided in this paragraph (k), no income results to the employee at the time the stock is transferred to the employee, and no deduction under section 162 is allowable at any time to the employer corporation or a related corporation with respect to such amount. (iv) If, during the employee8217s lifetime, the employee exercises an option granted under an employee stock purchase plan, but the employee dies before the stock is transferred to the employee pursuant to the exercise of the option, then for the purpose of sections 421 and 423, on the employee8217s death, the stock is deemed to be transferred immediately to the employee, and immediately thereafter, the employee is deemed to have transferred the stock to the employee8217s executor, administrator, trustee, beneficiary by operation of law, heir, or legatee, as the case may be. (2) If the special rules provided in this paragraph (k) are applicable to the disposition of a share of stock by an employee, then the basis of the share in the employee8217s hands at the time of the disposition, determined under section 1011, shall be increased by an amount equal to the amount includible as compensation in the employee8217s gross income under this paragraph (k). However, the basis of a share of stock acquired after the death of an employee by the exercise of an option granted to the employee under an employee stock purchase plan shall be determined in accordance with the rules of section 421(c) and sect1.421-2(c). If the special rules provided in this paragraph (k) are applicable to a share of stock upon the death of an employee, then the basis of the share in the hands of the estate or the person receiving the stock by bequest or inheritance shall be determined under section 1014, and shall not be increased by reason of the inclusion upon the decedent8217s death of any amount in the decedent8217s gross income under this paragraph (k). See Example (9) of this paragraph (k) with respect to the determination of basis of the share in the hands of a surviving joint owner. (3) Examples . The following examples illustrate the principles of this paragraph (k): Example 1 . On June 1, 2010, Corporation GG grants to Employee P, an employee of GG, an option under GG8217s employee stock purchase plan to purchase a share of GG stock for 85. The fair market value of GG stock on such date is 100 per share. On June 1, 2011, P exercises the option and on that date GG transfers the share of stock to P. On January 1, 2013, P sells the share for 150, its fair market value on that date. P8217s income tax return is filed on the basis of the calendar year. The income tax consequences to P and GG are as follows8212 (i) Compensation in the amount of 15 is includible in P8217s gross income for the year 2013, the year of the disposition of the share. The 15 represents the difference between the option price (85) and the fair market value of the share on the date the option was granted (100), because the value is less than the fair market value of the share on the date of disposition (150). For the purpose of computing P8217s gain or loss on the sale of the share, P8217s cost basis of 85 is increased by 15, the amount includible in P8217s gross income as compensation. Thus, P8217s basis for the share is 100. Because the share was sold for 150, P realizes a gain of 50, which is treated as long-term capital gain and (ii) GG is not entitled to any deduction under section 162 at any time with respect to the share transferred to P. Example 2 . Assume the same facts as in Example 1 . except that P sells the share of GG stock on January 1, 2014, for 75, its fair market value on that date. Because 75 is less than the option price (85), no amount in respect of the sale is includible as compensation in P8217s gross income for the year 2014. P8217s basis for determining gain or loss on the sale is 85. Because P sold the share for 75, P realized a loss of 10 on the sale that is treated as a long-term capital loss. Example 3 . Assume the same facts as in Example 1 . except that the option provides that the option price shall be 90 percent of the fair market value of the stock on the day the option is exercised. On June 1, 2011, when the option is exercised, the fair market value of the stock is 120 per share so that P pays 108 for the share of the stock. Compensation in the amount of 10 is includible in P8217s gross income for the year 2013, the year of the disposition of the share. This is determined in the following manner: the excess of the fair market value of the stock at the time of the disposition (150) over the price paid for the share (108) is 42 and the excess of the fair market value of the stock at the time the option was granted (100) over the option price, computed as if the option had been exercised at such time (90), is 10. Accordingly, 10, the lesser, is includible in gross income. In this situation, P8217s cost basis of 108 is increased by 10, the amount includible in P8217s gross income as compensation. Thus, P8217s basis for the share is 118. Because the share was sold for 150, P realizes a gain of 32 that is treated as long-term capital gain. Example 4 . Assume the same facts as in Example 1 . except that the option provides that the option price shall be the lesser of 95 percent of the fair market value of the stock on the first day of the offering period and 95 percent of the fair market value of the stock on the day the option is exercised. On June 1, 2011, when the option is exercised, the fair market value of the stock is 120 per share. P pays 95 for the share of the stock. Compensation in the amount of 5 is includible in P8217s gross income for the year 2013, the year of the disposition of the share. This is determined in the following manner: the excess of the fair market value of the stock at the time of the disposition (150) over the price paid for the share (95) is 55 and the excess of the fair market value of the stock at the time the option was granted (100) over the option price, computed as if the option had been exercised at such time (95), is 5. Accordingly, 5, the lesser, is includible in gross income. In this situation, P8217s cost basis of 95 is increased by 5, the amount includible in P8217s gross income as compensation. Thus, P8217s basis for the share is 100. Because the share was sold for 150, P realizes a gain of 50 that is treated as long-term capital gain. Example 5 . Assume the same facts as in Example 1 . except that instead of selling the share on January 1, 2013, P makes a gift of the share on that day. In that case 15 is includible as compensation in P8217s gross income for 2013. P8217s cost basis of 85 is increased by 15, the amount includible in P8217s gross income as compensation. Thus, P8217s basis for the share is 100, which becomes the donee8217s basis, as of the time of the gift, for determining gain or loss. Example 6 . Assume the same facts as in Example 2 . except that instead of selling the share on January 1, 2014, P makes a gift of the share on that date. Because the fair market value of the share on that day (75) is less than the option price (85), no amount in respect of the disposition by way of gift is includible as compensation in P8217s gross income for 2014. P8217s basis for the share is 85, which becomes the donee8217s basis, as of the time of the gift, for the purpose of determining gain. The donee8217s basis for the purpose of determining loss, determined under section 1015(a), is 75 (fair market value of the share at the date of gift). Example 7 . Assume the same facts as in Example 1 . except that after acquiring the share of stock on June 1, 2011, P dies on August 1, 2012, at which time the share has a fair market value of 150. Compensation in the amount of 15 is includible in P8217s gross income for the taxable year closing with P8217s death, 15 being the difference between the option price (85) and the fair market value of the share when the option was granted (100), because such value is less than the fair market value at date of death (150). The basis of the share in the hands of P8217s estate is determined under section 1014 without regard to the 15 includible in the decedent8217s gross income. Example 8 . Assume the same facts as in Example 7 . except that P dies on August 1, 2011, at which time the share has a fair market value of 150. Although P8217s death occurred within one year after the transfer of the share to P, the income tax consequences are the same as in Example 7 . Example 9 . Assume the same facts as in Example 1 . except that the share of stock was issued in the names of P and P8217s spouse jointly with right of survivorship, and that P and P8217s spouse sold the share on June 15, 2012, for 150, its fair market value on that date. Compensation in the amount of 15 is includible in P8217s gross income for the year 2012, the year of the disposition of the share. The basis of the share in the hands of P and P8217s spouse for the purpose of determining gain or loss on the sale is 100, that is, the cost of 85 increased by the amount of 15 includible as compensation in P8217s gross income. The gain of 50 on the sale is treated as long-term capital gain, and is divided equally between P and P8217s spouse. Example 10 . Assume the same facts as in Example 1 . except that the share of stock was issued in the names of P and P8217s spouse jointly with right of survivorship, and that P predeceased P8217s spouse on August 1, 2012, at which time the share had a fair market value of 150. Compensation in the amount of 15 is includible in P8217s gross income for the taxable year closing with his death. See Example 7 . The basis of the share in the hands of P8217s spouse as survivor is determined under section 1014 without regard to the 15 includible in the decedent8217s gross income. Example 11 . Assume the same facts as in Example 10 . except that P8217s spouse predeceased P on July 1, 2012. Section 423(c) does not apply in respect of the death of P8217s spouse. Upon the subsequent death of P on August 1, 2012, the income tax consequences in respect of P8217s taxable year closing with the date of P8217s death, and in respect of the basis of the share in the hands of P8217s estate, are the same as in Example 7 . If P had sold the share on July 15, 2012 (after the death of P8217s spouse), for 150, its fair market value at that time, the income tax consequences would be the same as in Example 1 . (l) Effective/applicability date . The regulations under this section are effective on November 17, 2009. These regulations apply to options granted under an employee stock purchase plan on or after January 1, 2010. Par. 6. Section 1.424-1, paragraphs (a)(10) Example 9 (iii) and (g)(1) are revised to read as follows: sect1.424-1 Definition and special rules applicable to statutory options .
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