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Option Holdings

Stock options come with a handful of rules: Rule 701, the 83(b) clock, Form 3921, the ISO $100k limit, the AMT preference on ISO exercise, and disposition timing. Option Holdings puts them in one row per grant, so you can see what each one might trigger.

Open Compliance & Tax → Option Holdings in the left navigation. The rules below apply to C-corporations, so the page appears only for C-corps; an LLC grants profits interests.

Open Option Holdings

There is one row per option grant that is outstanding or has been exercised. A cancelled or expired grant has a row only when options were exercised under it before it ended, because those exercises still need a Form 3921; one with nothing exercised is left out. Each row shows the stakeholder, the grant (shares, strike and grant date), its type (ISO or NSO), and a status column for each rule. Filter with All, Needs attention or ISO only, or pick one stakeholder.

The columns

  • Rule 701 - whether the company’s trailing-twelve-month compensatory grants sit within the Rule 701 exemption ceiling: Compliant, Approaching or Exceeded. It is a company-wide figure, repeated on every row. It counts option grants only; restricted stock and RSUs are not yet included, so it can understate your usage.
  • 83(b) - for early-exercisable grants, the state of the 83(b) election: filed (with the date it was filed), due, filed late, or past its 30-day window. An early-exercised grant with no election on record reads Unknown: an imported cap table carries no elections, so a blank there means we were never told. A grant that never needed one shows a dash. The same status appears on each holder’s own page, in the 83(b) column of their equity history.
  • Form 3921 - for an exercised ISO, whether its Form 3921 is Upcoming, Due or Issued. Exercises brought in from a Carta or Pulley import count too. When the only open ones happened in a year before your company joined Tenacap, the column reads Before Tenacap: confirm your prior provider furnished the form, then mark it issued. It is never shown as overdue.
  • ISO $100k - the §422(d) limit: ISOs whose shares are worth more than $100,000 (at grant-date value) first exercisable in one calendar year are treated as NSOs for the excess. The row shows Within or Exceeds, and the number of shares that become NSOs.
  • AMT-ISO - the alternative-minimum-tax preference an ISO exercise can create: the spread between fair market value and strike at exercise, on ISO shares still held at the end of that year. An asterisk means a fair market value was missing.
  • Disposition - for exercised ISO shares, Pending, Qualifying or Disqualifying under the §422(a)(1) holding periods (more than two years from grant and more than one year from exercise).

Employment status and ISOs

An incentive stock option is an employee-only instrument: §422(a)(2) requires the holder to have been an employee from the grant date until three months before exercise. A holder who moves from employee to contractor, or who was an advisor when the grant was made, raises that question.

Each stakeholder’s page carries a Status field - Employee, Contractor, Advisor, Director, or Other - with the date that status began. When a holder recorded as anything other than an employee has an outstanding ISO, the grant’s row here shows a note under its type (“Status changed while holding ISOs” when the status began after the grant date, “Recorded as a contractor and holds ISOs” when it was already so at grant), the row is counted under Needs attention, and a line under the table names the holder. The same note appears on the holder’s own page.

A holder with no status recorded shows nothing - a blank is not a clean bill of health, and Tenacap will not treat it as one. A contact-sheet import fills a blank status when the sheet’s Relationship column says something unambiguous (Employee, Contractor, Consultant, Advisor, Board member); it never changes a status someone has set by hand, and never guesses the date.

The note is a pointer. Whether the option keeps ISO treatment depends on the plan, the facts of the relationship, and when any exercise happens. That is for the holder and the company’s advisors to decide; Tenacap doesn’t.

What needs attention

The Needs attention filter shows rows where Rule 701 is Approaching or Exceeded, an ISO exceeds the $100k limit, an 83(b) is due, filed late, missed or unknown, a Form 3921 is due, a disposition is disqualifying, or an ISO holder is recorded as something other than an employee. The tax figures come from the same computation as the 409A & compliance page, so the two agree.