Instructions for Filling Out Form 3921

Discover the essentials of Form 3921, an IRS document used by corporations to report the exercise of an incentive stock option under Section 422(b). This article offers a concise overview of the form and a step-by-step guide on how to complete it accurately.

In this article, we'll provide information on Form 3921 and a step-by-step guide on how to fill it out, ensuring you have all the necessary details to report your incentive stock option exercises correctly.

What is Form 3921?

Form 3921 is a tax document used by corporations to report the exercise of incentive stock options (ISOs) to the Internal Revenue Service (IRS) and the individual who exercised the option. Its purpose is to help the IRS track the individual's potential tax liability related to the stock transfer.

Corporations must file Form 3921 for each transfer made during the year, providing information such as the date the option was granted, the date it was exercised, the exercise price per share, the fair market value per share on the exercise date, and the number of shares transferred. Additionally, the corporation must provide a statement to the person who exercised the option, containing the same information as on Form 3921.

Who Must File Form 3921?

Corporations are required to file Form 3921 for each transfer of stock made during a calendar year to an individual who exercised an incentive stock option described in section 422(b). However, there is an exception for nonresident alien employees who are not required to receive a Form W-2, Wage and Tax Statement, within the time period starting from the first day of the calendar year the option was granted and ending on the last day of the calendar year the option was exercised.

Form 3921 Tax Filing Deadlines and Due Dates

• Due date for providing statements to employees: January 31st of the year following the calendar year in which the option was exercised
• Due date for filing Form 3921 with the IRS (paper filing): February 28th of the year following the calendar year in which the option was exercised
• Due date for filing Form 3921 with the IRS (electronic filing): March 31st of the year following the calendar year in which the option was exercised

Form 3921 Late Payment Penalty

There aren’t specific late payment penalty amounts for Form 3921. However, it is important to note that the IRS may impose penalties for late filing or failure to furnish accurate statements to employees. To avoid potential penalties, it is crucial to adhere to the due dates for providing statements to employees and filing Form 3921 with the IRS, as mentioned in the previous sections.

Step-by-Step Instructions for Form 3921

The step-by-step instructions for filling out Form 3921 are as follows:

1. Enter the name, address, and Taxpayer Identification Number (TIN) of the person to whom the share or shares were transferred pursuant to the exercise of the option in the "Employee's Name, Address, and TIN" section.
2. If you have multiple accounts for a person for whom you are filing more than one Form 3921, provide the account number in the "Account Number" section.
3. Enter the date the option was granted in "Box 1. Date Option Granted".
4. Enter the date the option was exercised in "Box 2. Date Option Exercised".
5. Enter the exercise price per share of stock in "Box 3. Exercise Price Per Share".
6. Enter the fair market value (FMV) per share of stock on the date the option was exercised in "Box 4. Fair Market Value Per Share on Exercise Date".
7. Enter the number of shares of stock transferred pursuant to the exercise of the option in "Box 5. Number of Shares Transferred".
8. If the corporation is not the entity shown in the TRANSFEROR boxes in the upper left corner of Form 3921, enter the name, address, and TIN of the corporation whose stock is being transferred pursuant to the exercise of the option in "Box 6. If Other Than TRANSFEROR, Name, Address, and TIN of Corporation Whose Stock Is Being Transferred".

How to Submit Form 3921

To submit Form 3921, first complete the form with all required information, such as employee details, option grant and exercise dates, exercise price, fair market value, and number of shares transferred. Next, provide a statement to the person named on the form, if necessary. Finally, file a separate Form 3921 for each stock transfer made during the calendar year.

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