§ 4985. Stock compensation of insiders in expatriated corporations
(a)
Imposition of tax
In the case of an individual who is a disqualified individual with respect to any expatriated corporation, there is hereby imposed on such person a tax equal to—
(2)
the value (determined under subsection (b)) of the specified stock compensation held (directly or indirectly) by or for the benefit of such individual or a member of such individual’s family (as defined in section
267) at any time during the 12-month period beginning on the date which is 6 months before the expatriation date.
(b)
Value
For purposes of subsection (a)—
(1)
In general
The value of specified stock compensation shall be—
(c)
Tax to apply only if shareholder gain recognized
Subsection (a) shall apply to any disqualified individual with respect to an expatriated corporation only if gain (if any) on any stock in such corporation is recognized in whole or part by any shareholder by reason of the acquisition referred to in section
7874
(a)(2)(B)(i) with respect to such corporation.
(d)
Exception where gain recognized on compensation
Subsection (a) shall not apply to—
(1)
any stock option which is exercised on the expatriation date or during the 6-month period before such date and to the stock acquired in such exercise, if income is recognized under section
83 on or before the expatriation date with respect to the stock acquired pursuant to such exercise, and
(e)
Definitions
For purposes of this section—
(1)
Disqualified individual
The term “disqualified individual” means, with respect to a corporation, any individual who, at any time during the 12-month period beginning on the date which is 6 months before the expatriation date—
(3)
Specified stock compensation
(A)
In general
The term “specified stock compensation” means payment (or right to payment) granted by the expatriated corporation (or by any member of the expanded affiliated group which includes such corporation) to any person in connection with the performance of services by a disqualified individual for such corporation or member if the value of such payment or right is based on (or determined by reference to) the value (or change in value) of stock in such corporation (or any such member).
(f)
Special rules
For purposes of this section—
(1)
Cancellation of restriction
The cancellation of a restriction which by its terms will never lapse shall be treated as a grant.
(2)
Payment or reimbursement of tax by corporation treated as specified stock compensation
Any payment of the tax imposed by this section directly or indirectly by the expatriated corporation or by any member of the expanded affiliated group which includes such corporation—
(3)
Certain restrictions ignored
Whether there is specified stock compensation, and the value thereof, shall be determined without regard to any restriction other than a restriction which by its terms will never lapse.
(g)
Regulations
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section.