Code of Federal Regulations Title 26. Internal Revenue § 26.1.423–1 Applicability of section 421(a)

(a) General rule. Subject to the provisions of section 423(c) and § 1.423–2(k), 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 the individual's exercise of an option granted under an employee stock purchase plan, as defined in § 1.423–2, if the following conditions are satisfied—

(b) Cross-references. For rules relating to the requisite employment relationship, see § 1.421–1(h). For rules relating to the effect of a disqualifying disposition, see section 421(b) and § 1.421–2(b). For the definition of the term “disposition,” see section 424(c) and § 1.424–1(c). For the definition of the term “related corporation,” see § 1.421–1(i).

(c) Effective/applicability date. The regulations under this section are effective on November 17, 2009. The regulations under this section apply to options granted under an employee stock purchase plan on or after January 1, 2010.