,,ii  #aad? ,,congress  #b;d ,session   
,s4 #caeb  ,,9 ,,! ,,s5ate ,,( ,,!      
,,unit$ ,,/ates  ,july #aa1 #bjaf ,mr4  
,w>n] 7= himself & ,mr4 ,hell]7         
introduc$ ! foll[+ bill2 :i* 0 read     
twice & ref]r$ to ! ,committee on       
,f9ance  ,a ,,bill  ,to am5d ! ,int]nal 
,rev5ue ,code ( #aihf to modify ! tax   
treatm5t ( c]ta9 equity grants4  #a4    
,%ort title  ,?is ,act may be cit$ z !  
,emp[]+ ,employees ?r\gh ,/ock ,own]%ip 
,act4  #b4 ,treatm5t ( qualifi$ equity  
grants  7a7 ,9 g5]al  7#a7 ,election to 
def] income ,section #hc ( ! ,int]nal   
,rev5ue ,code ( #aihf is am5d$ by add+  
at ! end ! foll[+ new subsection3  7i7  
,qualifi$ equity grants  7#a7 ,9 g5]al  
,= purposes ( ?is subtitle1 if qualifi$ 
/ock is transf]r$ to a qualifi$ employee
 :o makes an election "u ?is            
subsection--  7,a7 no am\nt %all be     
includ$ 9 income "u subsection 7a7 9 !  
fir/ taxable ye> 9 :i* ! rights ( !     
employee 9 su* /ock are transf]able or  
are n subject to a sub/antial risk (    

=feiture1 :i*ev] is applicable1 &  7,b7 
an am\nt equal to ! am\nt :i* w\ld be   
includ$ 9 income ( ! employee "u        
subsection 7a7 7det]m9$ )\t reg>d to ?is
 subsection7 %all be includ$ 9 income 9 
! taxable ye> ( ! employee :i* includes 
! e>lie/ (--  7i7 ! date su* qualifi$   
/ock is sold1 ex*ang$1 or o!rwise       
transf]r$1  7ii7 ! date ! employee fir/ 
becomes an exclud$ employee1  7iii7 !   
fir/ date on :i* any /ock ( !           
corporation :i* issu$ ! qualifi$ /ock   
becomes readily tradable on an e/abli%$ 
securities m>ket1  7iv7 ! date t is #g  
ye>s aft] ! fir/ date ! rights ( !      
employee 9 su* /ock are transf]able or  
are n subject to a sub/antial risk (    
=feiture1 :i*ev] occurs e>li]1 or  7v7 !
 date on :i* ! employee elects "u ?is   
clause to include ! am\nt 9 income4     
7#b7 ,qualifi$ /ock  7,a7 ,9 g5]al ,=   
purposes ( ?is subsection1 ! t]m        
qualifi$ /ock means any /ock 9 a        
corporation if--  7i7 ! "r to receive   
su* /ock 0 provid$ by ! corporation--   

7,i7 9 connection ) ! p]=mance ( s]vices
 z an employee1 &  7,,ii7 su* "r 0      
receiv$ 9 ye> 9 :i* su* corporation 0 an
 eligible corporation1 &  7ii7 su* /ock 
is receiv$--  7,i7 9 connection ) !     
ex]cise ( an option1 or  7,,ii7 9       
settlem5t ( a re/rict$ /ock unit4  7,b7 
,limitation ,! t]m qualifi$ /ock %all n 
include any /ock if ! employee may sell 
to1 or o!rwise receive ca% 9 lieu ( /ock
 f1 ! corporation at ! "t t ! rights ( !
 employee are transf]rable or are n     
subject to a sub/antial risk ( =feiture4
  7,c7 ,eligible corporation ,= purposes
 ( subp>agraph 7,a77i77,,ii7-- 7i7 ,9   
g5]al ,! t]m eligible corporation means1
 ) respect to any cal5d> ye>1 any       
corporation if--  7,i7 no /ock ( su*    
corporation is readily tradable on an   
e/abli%$ securities m>ket dur+ su*      
cal5d> ye> or any prec$+ cal5d> ye>1 &  
7,,ii7 su* corporation has a writt5 plan
 "u :i* n less ?an #hj p]c5t ( all      
employees h ! same rights & privileges  
to receive qualifi$ /ock = su* cal5d>   

ye>4  7ii7 ,same rights & privileges  ,=
 purposes ( clause 7i77,,ii7-- 7,i7     
except z provid$ 9 subclauses 7,,ii7 &  
7,,iii71 ! det]m9ation ( rights &       
privileges ) respect to /ock %all be    
det]m9$ 9 a simil> mann] z provid$ "u   
section #dbc7;b77#e71  7,,ii7 employees 
%all n fail to be treat$ z hav+ ! same  
rights & privileges to receive qualifi$ 
/ock solely because ! numb] ( %>es      
available to all employees are n equal 9
 am\nt1 s long z ! numb] ( %>es         
available to ea* employee is m ?an a de 
m9imis am\nt1 &  7,,iii7 ! "r to receive
 qualifi$ /ock describ$ subp>agraph     
7,a77ii77,i7 %all n be treat$ z ! same  
"r or privilege z ! "r to receive       
qualifi$ /ock describ$ 9 subp>agraph    
7,a77ii77,,ii74  7iii7 ,employee ,=     
purposes ( clause 7i77,,ii71 ! t]m      
employee %all n include any employee    
describ$ 9 section #dihj;,e7d77#d7 or   
any exclud$ employee4  7iv7 ,special    
rule = cal5d> ye>s be=e #bjag ,9 ! case 
( any cal5d> ye> beg9n+ be=e ,janu>y #a1

 #bjag1 clause 7i77,,ii7 %all be appli$ 
)\t reg>d to :e!r ! rights & privileges 
) respect to ! qualifi$ /ock are ! same4
  7#c7 ,qualifi$ employee2 exclud$      
employee ,= purposes ( ?is subsection-- 
7,a7 ,9 g5]al ,! t]m qualifi$ employee  
means any individual :o--  7i7 is n an  
exclud$ employee1 &  7ii7 agrees to meet
 su* requirem5ts z det]m9$ by !         
,secret>y to be necess>y to ensure t !  
)hold+ requirem5ts ( ! corporation "u   
*apt] #bd ) respect to ! qualifi$ /ock  
are met4  7,b7 ,exclud$ employee ,! t]m 
exclud$ employee means1 ) respect to any
 corporation1 any individual-- 7i7 :o is
 or has be5 at any prior "t a #a-p]c5t  
own] 7)9 ! mean+ ( section              
#daf7;i77#a77;,b77ii771  7ii7 :o is or  
has be5 at any prior "t-- 7,i7 ! *ief   
executive (fic] ( su* corporation or an 
individual act+ 9 su* a capacity1 or    
7,,ii7 ! *ief f9ancial (fic] ( su*      
corporation or an individual act+ 9 su* 
a capacity1  7iii7 :o be>s a relation%ip
 describ$ 9 section #cah7;a77#a7 to any 

individual describ$ 9 subclause 7,i7 or 
7,,ii7 ( clause 7ii71 or  7iv7 :o is or 
has be5 = any prior taxable ye> "o ( !  
#d highe/ comp5sat$ (fic]s ( su*        
corporation det]m9$ on ! basis ( !      
%>ehold] disclosure rules = comp5sation 
"u ! ,securities ,ex*ange ,act ( #aicd  
7z if su* rules appli$ to su*           
corporation74  7#d7 ,election  7,a7 ,"t 
= mak+ election ,an election ) respect  
to qualifi$ /ock %all be made "u ?is    
subsection no lat] ?an #cj days aft] !  
fir/ "t ! rights ( ! employee 9 su* /ock
 are transf]able or are n subject to a  
sub/antial risk ( =feiture1 :i*ev]      
occurs e>li]4  7,b7 ,limitations ,no    
election may be made "u ?is section )   
respect to any qualifi$ /ock if-- 7i7 ! 
qualifi$ employee has made an election  
"u subsection 7b7 ) respect to su*      
qualifi$ /ock1 or  7ii7 any /ock ( !    
corporation :i* issu$ ! qualifi$ /ock is
 readily tradable on an e/abli%$        
securities m>ket at any "t be=e !       
election is made4  7#e7 ,o!r rules  7,a7

 ,controll$ gr\ps ,= purposes ( ?is     
subsection1 all corporations :i* are    
memb]s ( ! same controll$ gr\p (        
corporations 7z def9$ 9 section         
#aefc7;a77 %all be treat$ z "o          
corporation4  7,b7 ,notice requirem5t   
,any corporation t transf]s qualifi$    
/ock to an employee %all notify su*     
employee t-- 7i7 ! employee may elect to
 def] income on su* /ock "u ?is         
subsection1 &  7ii7 if ! employee makes 
su* an election1 ! am\nt ( income       
recogniz$ at ! end ( ! def]ral p]iod w  
be bas$ on ! value ( ! /ock at ! "t at  
:i* ! rights ( ! employee 9 su* /ock are
 transf]able or are n subject to        
sub/antial risk ( =feiture1 not)/&+ :e!r
 ! value ( ! /ock has decl9$ dur+ !     
def]ral p]iod4  4  7#b7 ,d$uction by    
employ] ,subsection 7h7 ( section #hc ( 
! ,int]nal ,rev5ue ,code ( #aihf is     
am5d$ by /rik+ or 7d77#b7 & ins]t+      
7d77#b71 or 7i74  7b7 ,)hold+  7#a7 ,"t 
( )hold+ ,section #cdja ( ! ,int]nal    
,rev5ue ,code ( #aihf is am5d$ by add+  

at ! end ! foll[+ new subsection3  7i7  
,qualifi$ /ock = :i* an election is 9   
effect "u section #hc7;i7 ,= purposes ( 
subsection 7a71 qualifi$ /ock 7z def9$ 9
 section #hc7;i77 ) respect to :i* an   
election is made "u section #hc7;i7 %all
 be treat$ z wages--  7#a7 receiv$ on ! 
e>lie/ date describ$ 9 section          
#hc7;i77#a77;,b71 &  7#b7 9 an am\nt    
equal to ! am\nt includ$ 9 income "u    
section #hc = ! taxable ye> :i* includes
 su* date4  4  7#b7 ,am\nt ( )hold+     
,section #cdjb ( su* ,code is am5d$ by  
add+ at ! end ! foll[+ new subsection3  
7t7 ,rate ( )hold+ = c]ta9 /ock ,9 !    
case ( any qualifi$ /ock 7z def9$ 9     
section #hc7;i77 ) respect to :i* an    
election is made "u section #hc7;i71 !  
rate ( tax "u subsection 7a7 %all n be  
less ?an ! maximum rate ( tax 9 effect  
"u section #a4  4  7c7 ,coord9ation )   
o!r def]r$ comp5sation rules  7#a7      
,election to apply def]ral to /atutory  
options  7,a7 ,inc5tive /ock options    
,section #dbb7;b7 ( ! ,int]nal ,rev5ue  

,code ( #aihf is am5d$ by ins]t+ or any 
option ) respect to :i* an election is  
made "u section #hc7;i7 aft] z an       
inc5tive /ock option4  7,b7 ,employee   
/ock pur*ase plans ,section #dbc7;a7 (  
su* ,code is am5d$ by add+ at ! end !   
foll[+ flu% s5t5ce3  ,! prec$+ s5t5ce   
%all n apply to any %>e ( /ock or option
 ) respect to :i* an election is made "u
 section #hc7;i74 4  7#b7 ,exclusion f  
def9ition ( nonqualifi$ def]r$          
comp5sation plan ,subsection 7d7 (      
section #dji;,a ( ! ,int]nal ,rev5ue    
,code ( #aihf is am5d$ by add+ at ! end 
! foll[+ new p>agraph3  7#g7 ,treatm5t (
 qualifi$ /ock ,receipt ( /ock %all n be
 treat$ z a nonqualifi$ def]r$          
comp5sation plan solely because ( an    
election "u #hc7;i74  4  7d7 ,in=mation 
report+ ,section #fjea ( ! ,int]nal     
,rev5ue ,code ( #aihf is am5d$ by ins]t+
 aft] p>agraph 7#f7 ! foll[+ new        
p>agraph3  7#g7 ! am\nts subject to     
subp>agraphs 7,a7 & 7,b7 ( section      
#hc7;i77#a71  4  7e7 ,p5alty = failure (

 employ] ,to provide notice ( tax       
consequ5ces ,section #ffeb ( ! ,int]nal 
,rev5ue ,code ( #aihf is am5d$ by add+  
at ! end ! foll[+ new subsection3  7o7  
,failure ,to provide notice "u section  
#hc7;i7 ,9 ! case ( ea* failure to      
provide a notice z requir$ by section   
#hc7;i77#e77;,b71 at ! "t prescrib$     
!re=1 unless x is %[n t su* failure is  
due to reasonable cause & n to willful  
neglect1 !re %all be paid1 on notice &  
dem& ( ! ,secret>y & 9 ! same mann] z   
tax1 by ! p]son fail+ to provide su*    
notice1 an am\nt equal to #ajj = ea* su*
 failure1 b ! total am\nt impos$ on su* 
p]son = all su* failures dur+ any cal5d>
 ye> %all n exce$ #ej1jjj4  4  7f7      
,effective dates  7#a7 ,9 g5]al ,except 
z provid$ 9 p>agraph 7#b71 ! am5dm5ts   
made by ?is section %all apply to any   
prop]ty--  7,a7 9 :i* ! rights ( ! p]son
 :o has ! b5eficial int]e/ 9 su* prop]ty
 are n transf]able be=e ,janu>y #a1     
#bjag1 &  7,b7 :i* is subject to a      
sub/antial risk ( =feiture be=e su*     

date4  7#b7 ,requirem5t to provide      
notice ,! am5dm5ts made by subsection   
7e7 %all apply to failures aft] ,decemb]
 #ca1 #bjaf4