Statutory Option Regulations Give Welcome Clarification

The Internal Revenue Service (IRS) has issued Proposed Regulations governing statutory options. Although "statutory options" include both Incentive Stock Options (ISOs) and Section 423 (Employee Stock Purchase Plan) Options, the main coverage of the Proposed Regulations is ISOs.

These Proposed Regulations withdraw and replace regulations proposed in 1984. The new Proposed Regulations are intended to provide a comprehensive framework that incorporates much of the 1984 effort with additional guidance under Sections 421 and 424 of the Internal Revenue Code (Code).