Form 3921 - Exercise of an Incentive Stock Option Under Section 422(b).

Instructions for Forms 3921
and 3922

Department of the Treasury
Internal Revenue Service

(Rev. October 2010)

Section references are to the Internal Revenue Code unless
otherwise noted.

the most current version of the General Instructions for Certain
Information Returns.

What’s New

Account Number

Forms 3921 and 3922. Forms 3921 and 3922 are required to
be filed for certain stock transfers occurring after 2009. The
filing of these information returns is required by section 6039,
as amended by the Tax Relief and Health Care Act of 2006
(Public Law 109-432).
• Use Form 3921 to report a corporation’s transfer of stock
pursuant to an employee’s exercise of an incentive stock option
described in section 422(b).
• Use Form 3922 to report a transfer of stock by an employee
where the stock was acquired pursuant to the exercise of an
option described in section 423(c).

Reminder
In addition to these specific instructions, you should also use
the most current version of the General Instructions for Certain
Information Returns. Those general instructions include
information about the following topics.
• Backup withholding.
• Electronic reporting requirements.
• Penalties.
• Who must file (nominee/middleman).
• When and where to file.
• Taxpayer identification numbers.
• Statements to recipients.
• Corrected and void returns.
• Other general topics.
You can get the general instructions from IRS.gov or by
calling 1-800-TAX-FORM (1-800-829-3676).

Specific Instructions for Form 3921
Who Must File
Every corporation which in any calendar year transfers to any
employee a share of stock pursuant to that employee’s exercise
of an incentive stock option described in section 422(b) must,
for that calendar year, file Form 3921 for each transfer made
during that year.
Exception. A Form 3921 is not required for the exercise of an
incentive stock option by an employee who is a nonresident
alien (as defined in section 7701(b)) and to whom the
corporation is not required to provide a Form W-2, Wage and
Tax Statement, for any calendar year within the time period
beginning with the first day of the calendar year in which the
option was granted to the employee and ending on the last day
of the calendar year in which the employee exercised the
option.
For this purpose, the term “corporation” is defined in section
7701(a) and includes, but is not limited to:
• The 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 (for example, a brokerage firm), and
• Any party in control of the payment of remuneration for
employment to the employee.

Statements to Employees
If you are required to file Form 3921, you must provide a
statement to the employee. For more information, see part M in

The account number is required if you have multiple accounts
for an employee for whom you are filing more than one Form
3921. Additionally, the IRS encourages you to designate an
account number for all Forms 3921 that you file. See part L in
the most current version of the General Instructions for Certain
Information Returns.

Box 1. Date option granted
Enter the date the option was granted to the employee.

Box 2. Date option exercised
Enter the date the employee exercised the option and
purchased the stock.

Box 3. Exercise price per share
Enter the exercise price per share of stock.

Box 4. Fair market value per share on exercise
date
Enter the fair market value (FMV) per share of stock on the date
the option was exercised.

Box 5. Number of shares transferred
Enter the number of shares of stock transferred to the
employee pursuant to the exercise of the option.

Box 6. If other than TRANSFEROR, name,
address, and EIN of corporation whose stock is
being transferred
Enter the name, address, and EIN of the corporation whose
stock is being transferred to the employee pursuant to the
exercise of the option. Enter this information only if the
corporation is not the entity shown in the TRANSFEROR boxes
in the upper left corner of Form 3921.

Specific Instructions for Form 3922
Who Must File
Every corporation, which in any calendar year records, or has
by its agent recorded, a transfer of the legal title of a share of
stock acquired by the employee pursuant to the employee’s
exercise of an option granted under an employee stock
purchase plan and described in section 423(c) (where the
exercise price is less than 100% of the value of the stock on the
date of grant, or is not fixed or determinable on the date of
grant), must, for that calendar year, file Form 3922 for each
transfer made during that year.
A return is required by reason of a transfer described in
section 6039(a)(2) only for the first transfer of legal title of the
shares by the employee, including the first transfer of legal title
to a recognized broker or financial institution. If a contractual
agreement exists or is entered into with a recognized broker or
financial institution pursuant to which shares acquired upon
exercise of the option will be immediately deposited into a
brokerage account established on behalf of the employee, then
the deposit of shares by the employee into the brokerage
account following the exercise of the option is the first transfer
of legal title of the shares acquired by the employee, and the
corporation is only required to file a return relating to that
transfer of legal title.

Cat. No. 23069T

Box 2. Date option exercised

Shares of stock transferred as a result of the exercise of an
option described above must be identified by a special serial
number or color for accurate reporting of the transfer of legal
title.
Exception. A Form 3922 is not required for the first transfer of
legal title of a share of stock by an employee who is a
nonresident alien (as defined in section 7701(b)) and to whom
the corporation is not required to provide a Form W-2, Wage
and Tax Statement, for any calendar year within the time period
beginning with the first day of the calendar year in which the
option was granted to the employee and ending on the last day
of the calendar year in which the employee first transferred
legal title to shares acquired under the option.
For this purpose, the term “corporation” is defined in section
7701(a) and includes, but is not limited to:
• The 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 (for example, a brokerage firm), and
• Any party in control of the payment of remuneration for
employment to the employee.

Enter the date the option to purchase the stock was exercised
by the employee.

Box 3. Fair market value per share on grant date
Enter the fair market value (FMV) per share of stock on the date
the option to purchase the stock was granted to the employee.

Box 4. Fair market value per share on exercise
date
Enter the FMV per share of stock on the date the option to
purchase the stock was exercised by the employee.

Box 5. Exercise price paid per share.
Enter the price paid per share on the date the option was
exercised.

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

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

Statements to Employees

Box 8. Exercise price per share determined as if
the option was exercised on the date shown
in box 1

If you are required to file Form 3922, you must provide a
statement to the employee. For more information, see part M in
the most current version of the General Instructions for Certain
Information Returns.

If the exercise price per share was not fixed or determinable on
the date of grant entered in Box 1, enter the exercise price per
share determined as if the option was exercised on the date of
grant entered in Box 1. If the exercise price per share is fixed or
determinable on the date of grant entered in Box 1, then leave
Box 8 blank.

Account Number
The account number is required if you have multiple accounts
for an employee for whom you are filing more than one Form
3922. Additionally, the IRS encourages you to designate an
account number for all Forms 3922 that you file. See part L in
the most current version of the General Instructions for Certain
Information Returns.

Box 1. Date option granted
Enter the date the option to purchase the stock was granted to
the employee.

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Instrs for Forms 3921 and 3922 (Rev. Oct. 2010)