Equity Forms › What is Form 3922? ESPP Stock Transfer Reporting
At a Glance
Understanding IRS Form 3922
Form 3922 (Transfer of Stock Acquired Through an Employee Stock Purchase Plan Under Section 423(c)) is used to report the first transfer of legal title of stock acquired through a qualifying Employee Stock Purchase Plan (ESPP).
Corporations must file this form when employees acquire stock through an ESPP and the stock is transferred out of the plan (either to the employee or to a broker).
Who Must File Form 3922?
Form 3922 must be filed by corporations that:
- Maintain an Employee Stock Purchase Plan qualifying under IRC Section 423
- Transfer legal title of stock acquired through the ESPP
The form is filed for each first transfer of legal title during the tax year.
Form 3922 Box Breakdown
| Box | Description |
|---|---|
| 1 | Date option (right to purchase) was granted |
| 2 | Date option was exercised (purchase date) |
| 3 | Fair market value per share on grant date |
| 4 | Fair market value per share on exercise (purchase) date |
| 5 | Exercise price per share |
| 6 | Number of shares transferred |
| 7 | Date legal title was transferred |
Employee Stock Purchase Plans Explained
A qualifying ESPP under Section 423 allows employees to purchase company stock at a discount, typically through payroll deductions. Key features include:
- Discount: Employees can purchase stock at up to 15% below market value
- Look-back provision: The purchase price may be based on the lower of the price at grant or exercise
- Equal rights: All participating employees must have equal rights and privileges
- Annual limit: Employees cannot purchase more than $25,000 worth of stock per year (based on FMV at grant)
When Legal Title Transfers
The form is filed upon the first transfer of legal title, which typically occurs when:
- Shares are transferred from the ESPP to the employee's brokerage account
- Shares are sold directly from the plan
- Shares are gifted or transferred to another party
Tax Treatment of ESPP Stock
The tax treatment depends on whether the employee makes a qualifying or disqualifying disposition:
- Qualifying disposition: Stock held for 2 years from grant and 1 year from purchase; discount treated as ordinary income, additional gain as capital gain
- Disqualifying disposition: Holding period not met; the spread at purchase is ordinary income
E-File Form 3922 with BoomTax
E-file your Form 3922 with the IRS using BoomTax. Our platform handles bulk filing for companies with many ESPP participants.
Import Your Form 3922 Data
You can import your data as Excel, XML, or use files from popular payroll providers like QuickBooks, UKG, ADP, and many more.
Step-By-Step Wizard
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E-File & Mail Employee Copies
Once your data is loaded, you can e-file and distribute employee copies in minutes.
Filing Deadlines
- Employee copy: January 31
- IRS filing (paper): February 28
- IRS filing (electronic): March 31
For details, see our Form 3922 due date guide.
Related Forms
- Form 3921: Reports ISO exercises
External Resources
ESPP Qualifying Disposition Timeline
Offering Date
Employee enrollment begins
Purchase Date
Stock purchased at discount
Title Transfer
Form 3922 filed
Qualifying Sale
2yr from grant + 1yr from purchase
Frequently Asked Questions About Form 3922
Form 3922 reports Employee Stock Purchase Plan (ESPP) stock transfers under Section 423, while Form 3921 reports Incentive Stock Option (ISO) exercises under Section 422. Both relate to equity compensation, but ESPPs involve purchasing stock at a discount through payroll deductions, while ISOs are options to buy stock at a fixed price.
Many ESPPs include a look-back provision where the purchase price is based on the lower of the stock price at the beginning of the offering period (grant date) or the end (purchase date). Combined with the 15% discount, this can result in significant savings. Box 3 (FMV at grant) and Box 4 (FMV at purchase) on Form 3922 show these values.
The first transfer of legal title typically occurs when shares move from the ESPP to the employee's personal brokerage account, or when shares are sold directly from the plan. If shares remain in the plan account, no Form 3922 is required until they are transferred out. Box 7 reports this transfer date.
A qualifying disposition occurs when you hold the stock for at least 2 years from the grant date AND 1 year from the purchase date. Only the discount (up to 15%) is taxed as ordinary income. A disqualifying disposition means selling before meeting both periods, and the entire spread at purchase becomes ordinary income.
Under Section 423, employees cannot purchase more than $25,000 worth of stock per calendar year (based on the FMV at the grant date). This limit applies across all ESPPs of the employer and related companies. Purchases exceeding this limit do not qualify for favorable tax treatment.
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BoomTax and its affiliates do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors prior to engaging in any transaction.