Stock Options
Today’s regulatory environment demands that stock options be managed correctly, which involves various valuation issues. The valuation analyst should have a working knowledge of stock option plans in order to take into consideration unique complexities that options present. The valuation team at ASL has extensive knowledge in the various intricacies of stock option plans, including valuation of the options, and can guide you through the regulations that exist.
409A
With the issuance of Section 409A of the Internal Revenue Code, public and private companies must now follow specific rules on the granting and valuation of stock options. If they fail to follow the rules outlined by Section 409A, the optionees will be at risk for an immediate tax on their options, including an additional 20% penalty tax. Section 409A relates to the income tax aspects of the granting of options, rather than the expensing of options compensation costs in the financial statements.
Questions to Ask Yourself
We have a tremendous amount of experience with IRC §409A, the IRS Code section that governs stock options. We have been involved in 409A since its inception over 20 years ago. We understand the grey areas and nuances that exist within the rules and framework created by the AICPA around 409A Valuation theory and application.
ASL works closely with your auditor to ensure compliance with 409A. We have successfully navigated hundreds of reviews and audits of our 409A Valuation by Big 4, regional and local auditors. We foster collaboration with stakeholders to ensure smooth audit process of our 409A Valuation.
409A Valuations are valid for one year unless there is a significant event within the company. We can discuss potentially significant events with you to determine if a refresh is needed. We also provide update services so that the cost for on-going valuation updates is less than the initial.
