Brief Case
Pension Resource

Treas. Reg. § 1.423-1

Applicability of section 421(a).
CFR 2004 annual edition (revised as of 2004-04-01) · superseded Apr 1, 2005 · last amended by T.D. 7728, 45 FR 72650, Nov. 3, 1980
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(a) General rule. Subject to the provisions of section 423(c) and paragraph (k) of this section, the special rules of income tax treatment provided in section 421(a) apply with respect to the transfer of a share of stock to an individual pursuant to his exercise of an option granted after December 31, 1963, under an employee stock purchase plan provided that the following conditions are satisfied—
(1) The individual must make no disposition of such share within 2 years from the date of the granting of the option, nor within 1 year (6 months for taxable years beginning before 1977; 9 months for taxable years beginning in 1977) after the transfer of such share to him; and
(2) At all times during the period beginning with the date of the granting of the option and ending on the day three months before the date of such exercise, the individual must be an employee of either the corporation granting the option, a related corporation of such corporation, or a corporation or a related corporation of such corporation issuing or assuming a stock option in a transaction to which section 425(a) applies.
(b) Cross-references. For rules relating to the employment relationship, see paragraph (h) of § 1.421-7. For rules relating to the effect of a disqualifying disposition, see section 421(b) and paragraph (b) of § 1.421-8. For definition of the term “disposition”, see section 425(c) and paragraph (c) of § 1.425-1.
Source credit, amendments & notes

[T.D. 6887, 31 FR 8798, June 24, 1966, as amended by T.D. 7728, 45 FR 72650, Nov. 3, 1980]

Treas. Reg. § 1.423-1 — Applicability of section 421(a). · CFR 2004 annual edition (revised as of 2004-04-01) · https://pensionresource.website/EAMain?content=EAMain.Law&id=cfr26-1.423-1&asof=1995-01-04 · printed Oct 16, 2026
On this page
  • (a) General rule.
  • (b) Cross-references.
Implements
I.R.C. § 423 Employee stock purchase plans
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Also cited in 1 other documents
IRS / Treasury
Proposed Rules
  • REG-106251-08Proposed Sep 29, 2008 — Proposed regulations under section 423 of the Code provide the requirements that must be satisfied in order for a plan to meet the definition of an employee st… (e)(1)

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Each row is a version of the text as published by the official source. Code dates are the edition/release point that first reflected the change; regulation dates are eCFR effective dates. The library checks the official sources automatically, so new versions appear here on their own; “run” opens the sync that recorded a version.

EffectiveThroughSourceAmended by
Apr 1, 1997Mar 31, 2005CFR 2004 annual edition (revised as of 2004-04-01) run 127T.D. 7728, 45 FR 72650, Nov. 3, 1980View
Apr 1, 2005Mar 31, 2010CFR 2009 annual edition (revised as of 2009-04-01) run 127T.D. 9144, 69 FR 46419, Aug. 3, 2004View · Redline (sign in)
Apr 1, 2010currenteCFR editorial change effective 2016-09-09 run 2T.D. 9471, 74 FR 59078, Nov. 17, 2009View · Redline (sign in)
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