Items from Other Entities _ M4

Question 1

What industries are specifically EXCLUDED from SSTB’s?

Specified Service Trade or Business (SSTB)

Answer 1

Engineer and Architects

Can be treated as QTB

Question 2

What is a Incentive Stock Option (ISO)?

Answer 2

• Specify total number of shares that may be issued.
• Must be Granted and approved by shareholders.
• Must be granted within the 10 years of earlier of adopted or approved plan date.
• Must be exercisable within 10 years of the grant date.
• The exercise price may not be less than FMV at grant date. “KEY POINT”
• Employee may not own more than 10% at grant date.
• Must be held 2 years after grant date and 1 year after exercise date.
• Employee must remain employee 3 months of grant date and before exercise date.

Question 3

What is the employer sponsored purchase plan (ESPP)?

Answer 3

• Specify total number of shares that may be issued.
• Must be Granted and approved by shareholders.
• Must be granted within the 10 years of earlier of adopted or approved plan date.
• Employee may not own more than 5% at grant date.
• Must include all full-time employees excludes highly compensated employees and those employed less than less than 2 years.
• The exercise price may not be less than 85% of FMV at grant or exercise date. “KEY POINT”
• Cannot be exercise > 27 months after the grant date.
• Cannot aquire the right to purchase > $25,000 of stock per year.
• Must be held 2 years after grant date and 1 year after exercise date.
• Employee must remain employee 3 months of grant date and before exercise date.

Question 4

What is non-qualified stock option?

Answer 4

Not a ISO or ESPP