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Who's the Employer?
Answers are provided by S. Derrin Watson, JD, APMStock Options and Leased Employees
| Question 124: Can a recipient organization provide an Incentive Stock Option (ISO) plan to persons who perform services for the recipient organization but are leased from a staffing firm? | |
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Answer: Let's start by looking at the definition of an ISO in IRC 422(b):
This, of course, moves us back to my favorite question (other than, perhaps "How large of a retainer would you like?"): Who's the Employer? If it is the recipient, as it usually is (see Chapter 4 of my book, Who's the Employer?), then there is absolutely no problem with the recipient granting an option to one of its common law employees. If the staffing firm is the true employer (rare), then there is no authority for the recipient to grant an ISO. The provisions of 414(n) do not apply to 422. |
Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of this and similar situations.
The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.) that occur after the date on which a particular Q&A is posted.
Copyright 1999-2017 S. Derrin Watson
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