Section 423

Under an espp a company allows certain employees to buy its stock at a discount from fair market value.

Section 423. Employee stock purchase plans of this type sometimes called tax qualified espps meet the requirements in section 423of the internal revenue code. Internal revenue code 423. 423 a general rule section 421 a shall apply with respect to the transfer of a share of stock to an individual pursuant to his exercise of an option granted under an employee stock purchase plan as defined in subsection b if.

Employee stock purchase plans. Employee stock purchase plans i r c. Section 423 of the code permits a plan to exclude employees who have been employed for less than two years or who are employed for less than 20 hours per week or five months per year.

When you become eligibleand enrollin the plan you can elect to have a specified percentage of your compensationwithheld from your paychecks on an after tax basis. Also owners of 5 or more of the common stock of a company by statute are not permitted to participate. 97 13603 c 1 b i struck out and before the plan may provide and inserted and the rules of section 83 i shall apply in determining which employees have a right to make an election under such section before semicolon at.