Practice question
An employee receives a compensatory stock-option grant but has not exercised it. The collector relies solely on current32(A)(1) to say the statutory exercise-time event has already occurred merely on grant. Which is correct?
- Every grant is necessarily an exercise.
- Compensatory options can never produce income at exercise.
- The statute requires cash settlement before any stock-option compensation can ever matter.
- The option automatically becomes a tax-exempt inheritance.
- Grant and exercise are distinct; the stated exercise-time inclusion cannot be assumed from grant alone.
Legal references
- NIRC, Sections 5-7,22-23 and32, as enacted in RA8424 and subject to the cited later amendments: https://lawphil.net/statutes/repacts/ra1997/ra_8424_1997.html
- RA12214, May29,2025, CMEPA, including amended NIRC Sections22,25 and32: https://lawphil.net/statutes/repacts/ra2025/ra_12214_2025.html
- CIR v. Shinko Electric Industries, G.R.226287, July6,2021, main decision, income concept and requisites: https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/67666
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