Statutory Stock Options? How to tell?

This might be a starting point. Look at section (422)(b).

Thanks very much for that. I'd seen mention of these different sections of the laws, but wasn't sure where to find them. It sounds like our options may qualify, but is there a way to verify that such that the IRS would be satisfied? The last thing I want is to find out three years down the road that they disagree, and owe a bunch of penalties.

My Japanese tax accountant seems reluctant to take responsibility for such a judgment, and instead is suggesting that I pay an outside accounting firm for an opinion. Is there a better way?

A good question. The requirements for statutory stock options are so general, that I think even many non-qualified stock options would be statutory.

At this point you should probably consult a tax attorney or request a private letter ruling or determination. You can read about these private letter rulings at:

1979,00.html It's so confusing that I think you would need a PLR to request what is user fee :) I think $275 for a determination might work. I'm not sure what's the difference between a determination and private letter ($625).

There are attorneys that draft PLRs, so if you use them you could expect to pay even more.

The following link has a very good explanation of what is required to have an ISO. The writeup includes references to the relevant sections of the IRC.