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socrateaser, Attorney
Category: Business Law
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Experience:  Retired (mostly)
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If my wife works in my company (I am a 10%+ shareholder) and

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If my wife works in my company (I am a 10%+ shareholder) and she is granted ISOs, would the price need to be at 110% of FMV, as if they were issued to me? She does not own any stock in the company.

Under Treas. Reg. 1.424-1(d), a spouse's ownership in ISOs is attributed to the other spouse for purposes of qualifying the ISO. In order to avoid the disqualification provision of IRC 422(b)(6), the ISOs issued to your spouse would have to be valued at 110% of fair market value.

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