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ERISAgeek111

Change NQSO plan to ISO plan?

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Client executed a non qualified stock option agreement with an employee, but claims it actually meant to give the employee incentive stock options.  Is there a quick way to fix this? I have not yet seen the actual equity incentive plan (asked for a copy).  Thanks. 

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Assuming the plan meets all the ISO requirements (limits, term, nontransferability, shareholder approval), etc., and that the price of the stock has not gone up, cancel the NQSO and issue an ISO.

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the agreement does meet all the ISO requirements, and no options have been exercised, but the FMV of the stock has gone up.

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2 hours ago, ERISAgeek111 said:

you mean the agreement? it says they options are intended to be NQSOs. 

ERISAgeek111, Bob the Swimmer preempted my next question. There probably is a "mistake of fact" exception to the new grant rule, similar to how there is a mistake of fact exception for Section 125 plan elections, but you will have to figure out whether the facts of the error are enough here to convince IRS (and your CPA auditing firm) that there was a mistake of fact.

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