Preparing for Year-End: 2025 6039 Reporting Requirements

As 2025 comes to a close, companies that offer stock plans must prepare for another year-end reporting cycle, including the critical requirements of IRC Section 6039.

IRC 6039 reporting requires companies to provide participants with tax statements and to file with the IRS for:

• Incentive Stock Option (ISO) exercises (Form 3921)
• Transfers of stock acquired through a Section 423(b) Employee Stock Purchase Plan (ESPP) (Form 3922)

Accurate and timely reporting is essential to avoid IRS penalties, maintain compliance, and support employees as they prepare their taxes.

Key 6039 Reporting Deadlines for 2025 Transactions

• Employee statements: Deliver by January 31, 2026 to all participants with reportable ISO or ESPP transactions in 2025.
• IRS filings: File Forms 3921 and 3922 electronically by March 31, 2026.
  • Paper filing (less common) is due February 28, 2026.
  • Most companies must file electronically if they have 10 or more returns in aggregate.

Best Practices for 6039 Compliance

1. Validate Data Accuracy

Inaccurate grant dates, exercise prices, or fair market values can create issues for both the company and employees. Before year-end, review all ISO and ESPP data to ensure accuracy.

2. Leverage Efficient Reporting Tools

Automated platforms or third-party vendors can streamline 6039 compliance by:

• Importing stock plan and HR data
• Generating Forms 3921/3922
• Validating records before submission
• Filing electronically with the IRS

3. Communicate with Employees

Proactive communication prevents confusion and reduces questions. Let employees know when they can expect statements, and provide FAQs or resources for understanding their forms.

4. Maintain Robust Records

Keep detailed records of ISO exercises and ESPP transactions, including:

• Grant and exercise dates
• Number of shares
• Exercise price and fair market value
• Participant information

Good documentation is essential in case of IRS audits.

5. Educate on Tax Consequences

ISO and ESPP transactions have specific tax implications that affect employees’ returns. Accurate 6039 reporting ensures both employees and the IRS can determine liabilities correctly. Encourage employees to seek guidance from tax advisors.

6. Stay Current on IRS Rules

IRS guidance evolves, and penalties for non-compliance can be steep. Partnering with experts or outsourcing can help you stay ahead of changes and avoid costly errors.

What 6039 Reporting Involves

• Form 3921 – Exercise of an Incentive Stock Option (ISO)
  Reports grant and exercise dates, number of shares exercised, exercise price, and fair market value at exercise.
• Form 3922 – Transfer of Stock Acquired Through an ESPP
  Reports grant and exercise dates, number of shares purchased, exercise price, and fair market values at grant and exercise.
• Employee Statements
  A copy of each form must also be provided to participants by January 31, 2026.

Why Getting 6039 Right Matters

Accurate 6039 reporting protects your company from IRS penalties, strengthens compliance credibility, and builds trust with employees. Early preparation and strong data validation can transform year-end reporting from a stressful scramble into a smooth, predictable process.

Partner with SOS for 2025 Year-End Reporting

At Stock & Option Solutions (SOS), we help companies manage 6039 reporting from start to finish, from data validation and form generation to IRS e-filing and employee statement distribution. Our team ensures compliance, accuracy, and peace of mind as you close out the year.

👉 Contact us today to learn how SOS can streamline your 2025 year-end reporting requirements.