PUBLIC LAW 97-34—AUG. 13, 1981
95 STAT. 259
at least 110 percent of the fair market value of the stock subject to the option and such option by its terms is not exercisable after the expiration of 5 years from the date such option is granted. "(9) SPECIAL RULE WHEN DISABLED.—For purposes of subsection (a)(2), in the case of an employee who is disabled (within the meaning of section 105(d)(4)), the 3-month period of subsection (a)(2) shall be 1 year." (b) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) Section 421 (relating to general rules in the case of stock 26 USC 421. options) is amended— (A) by inserting "422A(a)," after "422(a)," in subsections (a),(b),and(c)(l)(A),and (B) by inserting "422A(a)(l)," after "section 422(a)(l)," in subsection (b). (2) Section 425(d) (relating to attribution of stock ownership) is 26 USC 425. amended by inserting "422A(b)(6)," after "422(b)(7),". (3) Section 425(g) (relating to special rules) is amended by inserting "422A(a)(2)," after *^422(a)(2),". (4) Section 425(h)(3)(B) (relating to definition of modification) is amended by inserting "422A(b)(5)," after "422(b)(6),". (5) Section 6039 (relating to information required in connection 26 USC 6039. with certain options) is amended— (A) by inserting ", an incentive stock option," after "qualified stock option in subsection (a)(l), (B) by inserting "incentive stock option," after "qualified stock option," in subsection ObXl), and (C) by adding at the end of subsection (c) the following new paragraph: "(4) The term 'incentive stock option', see section 422A(b)." (6) The table of sections for part II of subchapter D of chapter 1 is amended by inserting after the item relating to section 422 the following new item:
'Sec. 422A. Incentive stock options." (c) EFFECTIVE DATES AND TRANSITIONAL RULES.— (1) OPTIONS TO WHICH SECTION APPLIES.—
(A) IN GENERAL.—Except as provided in subparagraph (B), the amendments made by this section shall apply with respect to options granted on or after January 1, 1976, and exercised on or after January 1, 1981, or outstanding on such date. (B) ELECTION AND DESIGNATION OF OPTIONS.—In the case of an option granted before January 1, 1981, the amendments made by this section shall apply only if the corporation granting such option elects (in the manner and at the time prescribed by the Secretary of the Treasury or his delegate) to have the amendments made by this section apply to such option. The aggregate fair market value (determined at the time the option is granted) of the stock for which any employee was granted options (under all plans of his employer corporation and its parent and subsidiary corporations) to which the amendments made by this section apply by reason of this subparagraph shall not exceed $50,000 per calendar year and shall not exceed $200,000 in the aggregate. (2) CHANGES IN TERMS OF OPTIONS.—In the case of an option granted on or after January 1, 1976, and outstanding on the date of the enactment of this Act, paragraph (1) of section 425(h) of the
26 USC 422A "* °®
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