Generating Form 3921 in Carta
Section 6039 of the Internal Revenue Code requires companies to provide Form 3921 Copy B to the employee by January 31 of the year following the year of exercise of an incentive stock option (ISO). The company must also file Form 3921 with the IRS no later than Feb 28 if filed on paper, or March 31, if filed electronically.
1. To generate Form 3921, navigate to 'Form 3921' under Compliance. Then click 'Generate 3921s.'
2. Choose the effective year of the report, and click 'Next: check data.'
3. Click on the links under the missing data set.
If you have any missing company tax data, navigate to 'Account' under Company, then click 'Profile.' Enter Tax ID, TCC (optional) and address.
Note: Without a TCC, only forms B and C will be generated.
4. Return to the Form 3921 page to update any missing stakeholder tax data.
5. Update missing data under 'Stakeholder Details.'
6. Review and update the historical 409A valuation for every tax year in which you will be running Form 3921.
7. If any historical 409A values are missing, click 'Add fair market value' to enter ALL historical values.
8. Return to Form 3921 page. Once the three data sets are complete and you have checked the box under "Confirm company data," click'Next: add contact info.'
Company contact is formatted into the Electronic Copy A file that will be uploaded to the IRS site:
The form will take a few minutes to generate depending on the number of exercises in that tax year. Refresh the page (or navigate away and return later) after a few minutes.
9. Once ready, click 'Download reports' for the appropriate report.
This will download a file to the computer that contains all necessary data to electronically file Copy A and distribute Copy B and Copy C:
The proper documents will be broken out into three appropriate files:
Copy A will be a specially formatted Electronic file. DO NOT EDIT THIS FILE, ONLY DOWNLOAD AND UPLOAD THIS INTO THE IRS PAGE. Instructions can be found here.
If any data needs to be updated, it should be done in Carta and then the report should be reset by returning to the Form 3921 page and clicking 'Actions' on the tax year and clicking 'Rerun Report.'
Copy B should be delivered to all exercising employees by the January 31st deadline, you can do this electronically on Carta. Click on 'Deliver Copy B.' To see how employees can access their copy B, click here.
Copy C is for the company's records.