[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1383 Introduced in Senate (IS)]
107th CONGRESS
1st Session
S. 1383
To amend the Internal Revenue Code of 1986 to clarify the treatment of
incentive stock options and employee stock purchase plans.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
August 3, 2001
Mrs. Clinton (for herself and Mr. Roberts) introduced the following
bill; which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to clarify the treatment of
incentive stock options and employee stock purchase plans.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. EXCLUSION OF INCENTIVE STOCK OPTIONS AND EMPLOYEE STOCK
PURCHASE PLAN STOCK OPTIONS FROM WAGES.
(a) Exclusion From Employment Taxes.--
(1) Social security taxes.--
(A) Amendment of internal revenue code.--Section
3121(a) of the Internal Revenue Code of 1986 (relating
to definition of wages) is amended by striking ``or''
at the end of paragraph (20), by striking the period at
the end of paragraph (21) and inserting ``; or'', and
by inserting after paragraph (21) the following new
paragraph:
``(22) remuneration on account of--
``(A) a transfer of a share of stock to any
individual pursuant to an exercise of an incentive
stock option (as defined in section 422(b)) or under an
employee stock purchase plan (as defined in section
423(b)), or
``(B) any disposition by the individual of such
stock.''.
(B) Amendment of social security act.--Section
209(a) of the Social Security Act is amended by
striking ``or'' at the end of paragraph (17), by
striking the period at the end of paragraph (18) and
inserting ``; or'', and by inserting after paragraph
(18) the following new paragraph:
``(19) Remuneration on account of--
``(A) a transfer of a share of stock to any
individual pursuant to an exercise of an incentive
stock option (as defined in section 422(b) of the
Internal Revenue Code of 1986) or under an employee
stock purchase plan (as defined in section 423(b) of
such Code), or
``(B) any disposition by the individual of such
stock.''.
(2) Railroad retirement taxes.--Subsection (e) of section
3231 of the Internal Revenue Code of 1986 is amended by adding
at the end the following new paragraph:
``(11) Qualified stock options.--The term `compensation'
shall not include any remuneration on account of--
``(A) a transfer of a share of stock to any
individual pursuant to an exercise of an incentive
stock option (as defined in section 422(b)) or under an
employee stock purchase plan (as defined in section
423(b)), or
``(B) any disposition by the individual of such
stock.''.
(3) Unemployment taxes.--Section 3306(b) of such Code
(relating to definition of wages) is amended by striking ``or''
at the end of paragraph (16), by striking the period at the end
of paragraph (17) and inserting ``; or'', and by inserting
after paragraph (17) the following new paragraph:
``(18) remuneration on account of--
``(A) a transfer of a share of stock to any
individual pursuant to an exercise of an incentive
stock option (as defined in section 422(b)) or under an
employee stock purchase plan (as defined in section
423(b)), or
``(B) any disposition by the individual of such
stock.''.
(b) Wage Withholding Not Required on Disqualifying Dispositions.--
Section 421(b) of the Internal Revenue Code of 1986 (relating to effect
of disqualifying dispositions) is amended by adding at the end the
following new sentence: ``No amount shall be required to be deducted
and withheld under chapter 24 with respect to any increase in income
attributable to a disposition described in the preceding sentence.''.
(c) Wage Withholding Not Required on Compensation Where Option
Price Is Between 85 Percent and 100 Percent of Value of Stock.--Section
423(c) of the Internal Revenue Code of 1986 (relating to special rule
where option price is between 85 percent and 100 percent of value of
stock) is amended by adding at the end the following new sentence: ``No
amount shall be required to be deducted and withheld under chapter 24
with respect to any amount treated as compensation under this
subsection.''.
(d) Effective Date.--The amendments made by this section shall
apply to stock acquired pursuant to options exercised after the date of
the enactment of this Act.
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