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The grant date is usually the first day of the offering period. This is sometimes called the enrollment date.
For numerous reasons, the grant date is important in ESPPs that are tax-qualified under Section 423. It starts the clock for tax purposes, determines the stock price to be used for calculating the $25,000 limitation, and serves as the point for calculating any lookback price.
The final ESPP regulations, adopted by the IRS in November 2009, provide guidance on what your company must do to make the enrollment date be the grant date for these purposes. Your ESPP now needs to clarify that the maximum number of shares which can be purchased must be specified by either a flat share limit or a formula (e.g. $25,000 divided by the stock price on the first day of the offering). If this maximum is not fixed and determinable at the start of the offering, the purchase date becomes the grant date. Therefore, your ESPP must have a per-person, per-offering limit on the number of shares employees can purchase. |
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