Stock rights
(2) Stock rights. A stock right is not subject to a substantial risk of forfeiture at the earlier of the first date the holder may exercise the stock right and receive cash or property that is substantially vested (as defined in 1.83-3(b)) or the first date that the stock right is not subject to a forfeiture condition that would constitute a substantial risk of forfeiture. Accordingly, a stock option that the service provider may exercise immediately and receive substantially vested stock is not subject to a substantial risk of forfeiture, even if the stock option automatically terminates upon the service provider's separation from service. (3) Enforcement of forfeiture condition(i) In general. In determining whether the possibility of forfeiture is substantial in the case of rights to compensation granted by a service recipient to a service provider that owns a significant amount of the total combined voting power or value of all classes of equity of the service recipient (where the service provider's ownership is determined with application of the attribution rules under section 318 if the service recipient is a corporation, or if the service recipient is an entity that is not a corporation, with application by analogy of the attribution rules under section 318), all relevant facts and circumstances will be taken into account in determining whether the probability of the service recipient enforcing such condition is substantial, including (A) The service provider's relationship to other equity holders and the extent of their control, potential control and possible loss of control of the service recipient; (B) The position of the service provider in the service recipient and the extent to which the service provider is subordinate to other service providers; (C) The service provider's relationship to the officers and directors of the service recipient (or similar positions with respect to a noncorporate service recipient); (D) The person or persons who must approve the service provider's discharge; and (E) Past actions of the service recipient in enforcing the restrictions. (ii) Examples. The following examples illustrate the rules of paragraph (d)(3)(i) of this section: