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Date:   Wed, 27 Jan 2010
From:   Matt

Hi-

My fiancé was given 5,000 stock options by her employer. She resigned and was immediately asked to leave. Her stock option agreement stated that options must be exercised within 30 days of termination of employment. She sent her exercise notice on the 31st day after termination (via fax).

The company did not respond. Is there any grace period? I saw the Internal Revenue Code states 90 days after termination (for incentive stock options). Any grounds for an argument?

Thanks!

Answer

Date:   5 Feb 2010

Hello Matt,

She might want to consult with an attorney, but I'm not very optimistic. The Internal Revenue Code gives parameters within which a plan can be written, but the plan can state a shorter period to exercise than the Code and will "trump" the Code provision. The fax should "date stamp" the notice as late.

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.