Ending the Double Standard for Stock Options Act

        [Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 626 Introduced in House (IH)]

108th CONGRESS
1st Session
H. R. 626

To amend the Internal Revenue Code of 1986 to provide that corporate
tax benefits from stock option compensation expenses are allowed only
to the extent such expenses are included in a corporation's financial
statements.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

February 5, 2003

Mr. Stark (for himself, Mr. Pomeroy, Mr. Waxman, Mr. George Miller of
California, Mr. Olver, Ms. Schakowsky, Mr. Lipinski, and Mr. Grijalva)
introduced the following bill; which was referred to the Committee on
Ways and Means

_______________________________________________________________________

A BILL

To amend the Internal Revenue Code of 1986 to provide that corporate
tax benefits from stock option compensation expenses are allowed only
to the extent such expenses are included in a corporation's financial
statements.

Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Ending the Double Standard for Stock
Options Act''.

SEC. 2. REQUIREMENTS FOR CONSISTENT TREATMENT OF STOCK OPTIONS BY
CORPORATIONS.

(a) Consistent Treatment for Tax Deduction.--Section 83(h) of the
Internal Revenue Code of 1986 (relating to deduction of employer) is
amended--
(1) by striking ``In the case of'' and inserting:
``(1) In general.--In the case of'', and
(2) by adding at the end the following new paragraph:
``(2) Special rules for property transferred pursuant to
stock options.--
``(A) In general.--In the case of property
transferred in connection with a stock option, the
deduction otherwise allowable under paragraph (1) shall
not exceed the amount the taxpayer has treated as an
expense for the purpose of ascertaining income, profit,
or loss in a report or statement to shareholders,
partners, or other proprietors (or to beneficiaries).
In no event shall such deduction be allowed before the
taxable year described in paragraph (1).
``(B) Special rules for controlled groups.--The
Secretary shall prescribe rules for the application of
this paragraph in cases where the stock option is
granted by a parent or subsidiary corporation (within
the meaning of section 424) of the employer
corporation.''.
(b) Consistent Treatment for Research Tax Credit.--Section
41(b)(2)(D) of the Internal Revenue Code of 1986 (defining wages for
purposes of credit for increasing research expenses) is amended by
inserting at the end the following new clause:
``(iv) Special rule for stock options and
stock-based plans.--The term `wages' shall not
include any amount of property transferred in
connection with a stock option and required to
be included in a report or statement under
section 83(h)(2) until it is so included, and
the portion of such amount which may be treated
as wages for a taxable year shall not exceed
the amount of the deduction allowed under
section 83(h) for such taxable year with
respect to such amount.''.
(c) Effective Date.--The amendments made by this section shall
apply to property transferred and wages provided on or after the date
of the enactment of this Act.
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