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We want to be your valuation firm of choice for Section 409 A
compliance. Internal Revenue Code Section 409 A ("409A")
effectively requires privately held businesses that award stock
options or stock appreciation rights ("SARS") to have
independent valuations of their stock. In order to avoid
the onerous penalties of 409A, employers need to demonstrate
that the exercise price of stock options and SARs is not below
fair market value. The compliance deadline is December 31,
2007. It has been the IRS's opinion that many stock options
and SARs issued by privately held companies have been issued "in
the money" and are nothing more than a form of deferred
compensation effectively shifting current compensation to a
future period. There has been significant press about
stock options issued at below fair market value at dates
conducive to the recipient and the adoption of Section 409A is
one vehicle the IRS is using to curtail abuse.
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