SECTION 1. PURPOSE

This revenue procedure provides an exception from reporting on Form 1099–B, “ Proceeds From Broker and Barter Exchange Transactions ”, for transactions involving an employee, former employee, or other service provider (a “service provider”) who has obtained a stock option in connection with the performance of services. Where the service provider purchases stock through the exercise of the stock option and sells that stock on the same day through a broker, the broker executing such a sale is not required to report the sale on Form 1099–B, provided certain conditions are met.