Page:United States Statutes at Large Volume 118.djvu/1488

 118 STAT. 1458 PUBLIC LAW 108–357—OCT. 22, 2004 Subtitle F—Stock Options and Employee Stock Purchase Plan Stock Options SEC. 251. EXCLUSION OF INCENTIVE STOCK OPTIONS AND EMPLOYEE STOCK PURCHASE PLAN STOCK OPTIONS FROM WAGES. (a) EXCLUSION FROM EMPLOYMENT TAXES.— (1) SOCIAL SECURITY TAXES.— (A) Section 3121(a) (relating to definition of wages) is amended by striking ‘‘or’’ at the end of paragraph (20), by striking the period at the end of paragraph (21) and inserting ‘‘; or’’, and by inserting after paragraph (21) the following new paragraph: ‘‘(22) remuneration on account of— ‘‘(A) a transfer of a share of stock to any individual pursuant to an exercise of an incentive stock option (as defined in section 422(b)) or under an employee stock pur chase plan (as defined in section 423(b)), or ‘‘(B) any disposition by the individual of such stock.’’. (B) Section 209(a) of the Social Security Act is amended by striking ‘‘or’’ at the end of paragraph (17), by striking the period at the end of paragraph (18) and inserting ‘‘; or’’, and by inserting after paragraph (18) the following new paragraph: ‘‘(19) Remuneration on account of— ‘‘(A) a transfer of a share of stock to any individual pursuant to an exercise of an incentive stock option (as defined in section 422(b) of the Internal Revenue Code of 1986) or under an employee stock purchase plan (as defined in section 423(b) of such Code), or ‘‘(B) any disposition by the individual of such stock.’’. (2) RAILROAD RETIREMENT TAXES.—Subsection (e) of section 3231 is amended by adding at the end the following new para graph: ‘‘(12) QUALIFIED STOCK OPTIONS.—The term ‘compensation’ shall not include any remuneration on account of— ‘‘(A) a transfer of a share of stock to any individual pursuant to an exercise of an incentive stock option (as defined in section 422(b)) or under an employee stock pur chase plan (as defined in section 423(b)), or ‘‘(B) any disposition by the individual of such stock.’’. (3) UNEMPLOYMENT TAXES.—Section 3306(b) (relating to definition of wages) is amended by striking ‘‘or’’ at the end of paragraph (17), by striking the period at the end of paragraph (18) and inserting ‘‘; or’’, and by inserting after paragraph (18) the following new paragraph: ‘‘(19) remuneration on account of— ‘‘(A) a transfer of a share of stock to any individual pursuant to an exercise of an incentive stock option (as defined in section 422(b)) or under an employee stock pur chase plan (as defined in section 423(b)), or ‘‘(B) any disposition by the individual of such stock.’’. (b) WAGE WITHHOLDING NOT REQUIRED ON DISQUALIFYING DIS POSITIONS.—Section 421(b) (relating to effect of disqualifying dis positions) is amended by adding at the end the following new sentence: ‘‘No amount shall be required to be deducted and withheld 42 USC 409.

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