IT-113R4 "Benefits to Employees-Stock Options"

Where an employee requires shares pursuant to a stock option agreement that prohibits transfers of the shares for a period of time, the shares should be valued at an appropriate discount.

6. ...The word "issue" means to deliver unissued shares of a corporation, including...for no monetary consideration. Therefore, section 7 applies when an employer corporation agrees to sell or issue, to an employee of the corporation or of a corporation with which it does not deal at arm's length, its own shares, or to sell or have issued those of a corporation with which it does not deal at arm's length, at less than fair market value or for no monetary consideration.