IRS Form 3921 is a tax form used to report the exercise of an Incentive Stock Option (ISO). The IRS began requiring it in 2011 for ISO exercises that occurred in 2010.
An ISO lets an employee buy a set number of shares at a pre-agreed price. Understanding the rules for form 3921 IRS helps ensure proper reporting and compliance.
What Information Is on IRS Form 3921?
The top of the irs form 3921 asks for:
-
Transferor’s name and address
-
Employee’s name and address
The business, also called the transferor, completes the form. The employee must later report any gain or loss when they sell or otherwise dispose of the stock.
An account number is also required. This unique number helps the employer track the employee’s account.
When You Need an Account Number
You must include an account number if you:
-
File 250 or more irs form 3921 records electronically
-
File more than one form 3921 IRS for the same employee
Box-by-Box Guide to Form 3921 IRS
Box 1 – Grant Date
The date the ISO was granted to the employee.
Box 2 – Exercise Date
The date the employee exercised the option and bought the stock at the set price.
Box 3 – Exercise Price Per Share
The price per share agreed upon when the option was granted.
Box 4 – Fair Market Value on Exercise Date
The FMV of one share on the exercise date. This shows how favorable the deal was.
Box 5 – Number of Shares Transferred
The total shares transferred from the employer to the employee at the price shown in Box 3.
Box 6 – Corporation Information (Optional)
The name, address, and EIN of the corporation whose stock is transferred, if not shown at the top of the form 3921 IRS.
Filing Requirement for 3921
Under the 2006 Tax Relief and Health Care Act (TRHCA), corporations must file an irs form 3921 each time an employee exercises an ISO and receives stock.
The only exception is for employees who are non-resident aliens.
Key Points
-
IRS Form 3921 reports ISO exercises to the IRS.
-
Form 3921 IRS includes grant date, exercise date, share price, and share count.
-
The irs form 3921 must be accurate and complete.