IRS Form 3921 and 3922

What is Form 3921 and 3922

Form 3921, Exercise of a Qualified Incentive Stock Option; and Form 3942, Transfer of Stock Acquired Through An Employee Stock Plan, are two tax return forms which relate to employee stocks that are required under the Tax Relief and Health Care Act of 2006. These forms are filed by certain corporations, applying only to certain stock transfers after 2009.

Who Must File Form 3921

Corporation which transfers to any person a share of stock in pursuance to that person’s exercise of an incentive stock option must file Form 3921 for each transfer made during the calendar year.

This form is not required though for the exercise of an incentive stock option by an employee who is a nonresident alien, and to whom the corporation is not required to provide Form W-2 for any calendar year within the period beginning on the first day of the calendar year when the option was granted to the employee, and ending on the last day of the same year when the employee exercised the option.

Who Must File Form 3922

Any corporation which has, or by its agent, during any calendar year records a transfer of the legal title of a share of stock acquired by the transferor (any person who acquires the shares pursuant to the exercise of the option) pursuant to the latter’s exercise of an option granted under an employee stock purchase plan, must file Form 3922 for that calendar year, for each transfer made during that year.

A return is required only for the first transfer of legal title of the shares by the transferor, including the first transfer of legal title to a recognized broker or financial institution.

In case a contractual agreement exists with a broker or financial institution by which shares acquired upon exercise of the option will be immediately deposited to the account of the broker on behalf of the transferor, then the deposit of the transfer of legal title of the shares acquired by the transferor into the brokerage account, the corporation is only required to file a return relating to the transfer of the legal title.

Shares of stock transferred by the means described above shall be identified in a manner sufficient to enable the accurate and precise reporting of the transaction of such share. This identification may be done by assigning to the share certificates of stock a special serial number or color.

The corporation whose stock is being transferred must file Form 3922. Except:

  • For the first transfer of legal title of a share of stock by an employee who is a nonresident alien.
  • Transactions with home the corporation is not required to provide a Form W-2, Wage and Tax Statement for any calendar year.

For the purpose of this form, the term “corporation” is defined as a corporation issuing the stock, a related corporation of the corporation, any agent of the corporation, any party distributing shares of stock or other payments in connection with the plan, or any party in control of the payment of remuneration for the employment to the employee.

When to File Form 3922

File Forms 3922 by February 29, 2016, or March 31, 2016, if filing electronically.