Incentive Stock Option

Report an incentive stock option and stock acquired through an incentive stock option plan in Schedule A. In addition, report your participation in the plan in Schedule C, Part II. Report options and stock held by your spouse in Schedule A only. 

Incentive Stock Option: Examples of Options Reported on Schedule A
Incentive Stock Option: An Example of an Incentive Stock Option Plan Reported on Schedule C, Part II

For You

Schedule A

Reporting Your Stock Option

Report an option if the value of the option was more than $1,000 at the end of the reporting period, or if the option produced more than $200 in income during the reporting period.

Block A: Provide the exact name of the stock for which the option was issued and write “stock option.”

Block B: If you are able to determine the value of your option, report the value by marking the appropriate column. Keep in mind that the value of an option is not the same as the value of the stock for which it was issued. However, your employer’s human resources office may be able to provide you with the value of your stock option. If your employer has not provided you with this information, the U.S. Office of Government Ethics will accept either of the following methods of valuation:

A) If the option is “underwater” or if the value of the option is otherwise difficult to determine, write “value not readily ascertainable” in Block A and provide the following information in Block A: (1) the name of the stock for which the option was issued; (2) the number of shares of the stock for which the option was issued; (3) the strike price; (4) the expiration date; (5) an indication as to whether the option is vested; and (6) the date on which the option will vest, if the option is unvested.

B) Alternatively, you may use any commonly accepted formula to calculate the value of your options (e.g., the Black-Scholes pricing model).

Block C: Report the amount of income produced during the reporting period by marking the appropriate “Amount” column. If the amount of income is more than $200, you also need to report the type of income by marking the applicable “Type” column(s). Incentive stock options normally do not produce income, which means most filers mark the “None (or less than $201)” column.

Reporting Your Stock

Report the stock and any income from the stock using the instructions in this guide for reporting stock.

Schedule C, Part II

You also need to report your participation in an incentive stock option plan in Schedule C, Part II.

Terms: You need to describe what will happen to your stock options. Specifically, report such details as whether you will retain vested options, exercise vested options, forfeit unvested options, or receive accelerated vesting of unvested options. If applicable, specify the timeframe in which these actions will occur (e.g., “upon my resignation”). In addition, report any anticipated grants of stock options.

Parties: Provide the name of the employer as well as the city and state in which the employer is located.

Date: Provide the month and year in which you began participating in the incentive stock option plan.

For Your Spouse

Schedule A

Report your spouse’s incentive stock options and stock acquired through an incentive stock option plan using the guidance provided above in the section titled, “For You.” 

Schedule C, Part II

Do not report an incentive stock option plan in which your spouse participates in Schedule C, Part II.

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This guide is not intended to provide investment advice, and you should not rely on statements in this guide when making investment decisions.