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Subject:   Question
Date:   Thu, 19 Aug 1999
From:   Gina

May an employer offer ISOs to "leased" employees? If so, are there any special or unusual tax consequences for the employer or the leased employees?

Please enlighten me. I will appreciate an insight you can provide.

Answer

Date:   Tue, 24 Aug 1999

Hello Gina,

An employer may not offer ISOs to leased employees.

This is one of the reasons leased employees are filing class action lawsuits to be considered regular employees.

One of the conditions of incentive stock options is they may only be granted to employees of the granting company. Leased employees are considered to be employees of an outside service company.

I hope you find this information helpful.

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.