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How to complete IRS Form 3922

An employee stock purchase plan is a way in which employees of a corporation can purchase the corporation’s stock often at a discount. Typically, employee’s contribute to the plan through regular payroll deductions, which accumulate between the offering date and the purchase date. At the purchase date, the accumulated funds are used to purchase shares in the company on behalf of the participating employees. The amount of discount depends on the plan but can be as much as 15% lower than the market price.

IRS Form 3922 is a new form starting in 2011 that businesses are required to report Transfer of Stock Acquired Through an Employee Stock Purchase Plan (ESPP) Under Section 423(c).

The top of IRS Form 3922 asks for the corporation name and address and EIN followed by the employee name and address and SSN. The corporation is required to prepared IRS Form 3922. No income is recognized when an employee exercises an option under an employee stock purchase plan. However, the employee must report gain or loss on their tax return for the year in which they sell the stock.

The form also asks for the account number. The account number is just a unique number that the employer uses to distinguish this employee’s account. If you are electronically submitting files with 250 records or more to the IRS, then you need an unique account number.

There are 8 boxes on IRS Form 3922. Each box is discussed below:

Box 1. Shows the date option granted. This is the offering date or the date the option to purchase the stock was granted to the employee.

Box 2. Shows the date option exercised to the date employee funds where used to purchase shares in the company.

Box 3. Shows the fair market value (FMV) per share on the date the option to purchase the stock was granted or offered to the employee.

Box 4. Shows the FMV per share on the date the employee exercised the option to purchase the stock.

Box 5. Shows the price paid per share on the date the employee exercised the option to purchase the stock.

Box 6. Shows the number of shares to which legal title was transferred by the employee.

Box 7. Shows the date legal title of the shares was first transferred by the employee.

Box 8. If the exercise price per share was not fixed or determinable on the date entered in box 1, box 8 shows the exercise price per share determined as if the option was exercised on the date in box 1. If the exercise price per share was fixed or determinable on the date shown in box 1, then box 8 will be blank.

Copy B of Form 3922 must be sent to the employee by the end of January. Copy A must be paper filed by the end of February or electronically filed by the end of March.

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