SECTION 4. PROCEDURE

.01 General . A broker may treat a sale as an “excepted sale” for purposes of § 1.6045–1(c)(3)(ii) if an employee, former employee or other service provider obtains substantially vested shares of stock from the exercise of an option and on the same day sells the shares through a broker.

.02 Statement to broker . To determine whether the service provider exercised the option and sold the underlying shares on the same day, the broker may rely on a receipt or written statement provided by the service recipient or the service provider showing the date of exercise. To determine whether the service recipient uses the sale price of the shares to calculate the compensation income generated to service providers by the option exercise, the broker may rely upon a written statement from the service recipient certifying that it follows that practice.

.03 Statement to customer . Under the circumstances described in section 3.01(4)(b) of this revenue procedure, the broker must furnish the service provider with a statement containing the following information:

(1) the gross sales price with respect to the shares sold through the broker;

(2) the commissions or other fees charged by the broker on the sale; and

(3) a description of how gain or loss with respect to shares obtained through the option exercise is calculated and the manner in which such gain or loss should be reported on a federal income tax return. The description need not be an

2002–29 I.R.B. 174 July 22, 2002

independent document, but may be incorporated in a document such as a settlement sheet provided to the broker’s customer in connection with the sale.