Print This Page

Subject:   Section 422
Date:   Tue, 28 Aug 2001
From:   Peter

Hi,

Does Section 422 of the IRC require that terminated employees have 3 months to exercise their vested options? Can a company Option Plan require a terminated employee to exercise their options in less than 90 days and still have the option plan comply with section 422?

Thanks

Answer

Date:   Fri, 7 Sep 2001

Hello Peter,

Section 422 does not state that the option has to continue in effect three months after termination to qualify as an ISO. That is the maximum allowed.

Good luck!

Mike Gray

For more information about incentive stock options, request our free report, Incentive Stock Options - Executive Tax and Financial Planning Strategies.

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained in this answer was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.