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November 02, 2006 Future of 409A Becomes a Little Bit Clearer
It appears that we are getting close to final regulations on 409A. For those
interested in the state of 409A regulations and the progress being made by
the Treasury, see the article released yesterday by CCH® PENSION AND BENEFITS -
11/1/06. "409A guidance "well along," says Treasury benefits tax counsel",
http://hr.cch.com/news/pension/110106a.asp. The message appears clear that
1) "the definition of nonqualified deferred compensation is broad, with most
exceptions and carve outs limited in scope" and 2) "the basic structure and
fundamental principles underlying the proposed rules have remained intact
during the comment process". In terms of underwater stock options "the
spread, not just the discount, would be considered as the stock value
increases" and "underwater stock options would not require any reporting
since a violation would take place only if and when an option was
exercised." In other words, "something for the file" will only be exposed if
and when you are successful and the IRS can identify that there are
significant dollars at stake.
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