Client Alert

New Reporting Requirements on Form W-2 for Compensation from Employer Provided Nonstatutory Stock Options

12/16/2002
On November 22, 2002, the Internal Revenue Service (the "IRS") issued Announcement 2002-108. Announcement 2002-108 reminds employers that, for Forms W-2 issued for the year 2003 and subsequent years, compensation resulting from employer provided nonstatutory stock options must be identified and reported in Box 12 of Form W-2 using Code V ("Income from the Exercise of Nonstatutory Stock Options").

Pursuant to IRS Announcements 2001-7 and 2001-92, reporting using Code V is optional for calendar years 2001 and 2002. Announcement 2001-92 also provides that, absent further guidance to the contrary, employers must report the income generated upon the exercise of nonstatutory stock options by using Code V in Box 12 of the Form W-2 beginning in the year 2003.

The IRS also noted that the forthcoming 2003 Form W-2 and its instructions will be consistent with Announcement 2002-108.

Close

Feedback

Disclaimer

Unsolicited e-mails and information sent to Morrison & Foerster will not be considered confidential, may be disclosed to others pursuant to our Privacy Policy, may not receive a response, and do not create an attorney-client relationship with Morrison & Foerster. If you are not already a client of Morrison & Foerster, do not include any confidential information in this message. Also, please note that our attorneys do not seek to practice law in any jurisdiction in which they are not properly authorized to do so.