Guest GENE Posted October 22, 1999 Posted October 22, 1999 HOPEFULLY SOMEONE CAN HELP ON THIS ONE. I HAVE A C CORP CLIENT WHO SEVERAL YEARS AGO TOOK STOCK OPTIONS FROM A CUSTOMER IN LIEU OF CASH FOR SERVICES. THE CLIENT WOULD LIKE TO ASSIGN THE OPTIONS TO THE COMPANY RETIREMENT PLAN INSTEAD OF MAKING A CASH CONTRIBUTION TO THE PLAN. THE OPTIONS HAVE AN EXERCISE PRICE OF $3.50 PER SHARE AND THE STOCK IS PUBLICLY TRADING AT $63.50. CAN THE OPTIONS BE ASSIGNED TO THE MPP AS A CONTRIBUTION AT $3.50 PER SHARE. PLEASE CITE ANY APPLICABLE IRS REGS.
Wessex Posted October 22, 1999 Posted October 22, 1999 No. There is DOL guidance (not regulations) that this is a prohibited transaction. Sorry, I don't have a cite.
Erik Read Posted October 23, 1999 Posted October 23, 1999 I would have to agree that it isn't allowed - one item for contention would also be if the plan allowed "Property" as a contribution, most plans don't allow that type of a contribution. The other point would be that the employer would then be taking a deduction for income from a prior period of time... I think he's out of luck, and will have to make what ever required contributions there are for the year in cash. If you find something to the contrary though - please be sure to post it so as to enlighten the rest of us. Thanks - __________________ Erik Read, APR CKC
Guest GENE Posted October 26, 1999 Posted October 26, 1999 I found that the contribution of unencumbered employer property by the employer would constitute a prohibited transaction under IRC ss. 4975 (See CIR vs Keystone Consolidated Industries)
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