Sometimes companies reward their employees by giving them incentive stock options (ISO). If these ISO were exercised during the year, then your company has to file Form 3921.
For each exercise, the company needs to file a separate Form. If the company does not manage to complete everything on time, then very high fines can be imposed, so this obligation should not be neglected. Plus, filling out forms is not that hard; you can use our form-building software to create them.
The form is to be completed by the company that supplied the ISOs during the current financial and accounting year.
However, there are exceptions; for example, filling out a form is not required if:
There are several deadlines for completing this document. The company is obliged to provide a completed form for:
In the event of a violation of the deadline, the company will be subject to fines, and their amounts can reach significant sums of millions of dollars. It is worth taking the deadlines seriously.
The form consists of four parts: A, B, C, and D. Copies B through D can be completed online in pdf format. The online version of copy A is not scannable, so it is forbidden to print it out from the website. Better to request it from the Revenue Service and they will send printed copies on a special paper. All four copies are the same; the only difference is that:
We will show you how to fill out the form using the example of copy B. Please see our illustrated guide below.
Start Filling out by Entering Company’s Data
Fill in the company’s details, including its business name, complete physical address, and the TIN.
Enter Employee’s Details
You need to enter the employee’s data as well, including their TIN, legal name, physical address, account number.
Complete Items 1-4
Fill in all the necessary information regarding the directly exercised ISO.
Fill in Box 6 (If Applicable)
If another corporation whose stock is being transferred appeared in the Transferor’s Box, then complete this step. Submit its business name, complete physical address. and the TIN.
The information provided in the document is used by the Revenue Service, among other things, to verify the claim for preferential tax treatment.
You must use this form to estimate the additional income that should be added when calculating the AMT tax liability.
The most important value for you, indicated in the document, is in Box 4. The company puts fair market value per share on the exercise date there, estimated by the company’s 409A valuation. You should already know the rest of the data specified in the form.
You must submit this form to your accountant to determine the date you exercised your options. Even if you have not sold any of the shares yet, this calculation could result in a tax liability. Ensure to save your copy of the form for personal records. You will need it for tax purposes when selling your ISOs.
You must receive it by January 31st. If within this period the employer has not sent it to you, then urgently contact them. If the deadlines are violated, the IRS imposes heavy fines on the company.
The company transfers the form data not only to you but also to the IRS. Therefore, do not try to hide any part of this form.