News Archive

"If the aggregate sales price or amount of securities sold by a company in reliance on Rule 701 during any consecutive 12-month period exceeds $10 million, before the date of sale the company must provide employees with 'enhanced disclosure' ... The new CDIs (271.26 and 271.27) clarify when enhanced disclosure must be provided and the consequence of not doing so."  MORE >>

"[1] Always report stock sales on Form 8949 and Schedule D, even if you sold all the shares immediately after acquiring them.... [2] [T]he cost basis reported by your broker on Form 1099-B is likely to be too low, requiring an adjustment on Form 8949. [3] Watch for the common error of double-reporting stock comp income on Form W-2.... [4] After an exercise/hold of ISOs, always calculate your alternative minimum tax (AMT). [5] If you owe the AMT, remember to use any AMT credit you may have."  MORE >>

"Although often grouped together, RSUs, ISOs and NSOs are taxed differently and create income at different points. Understanding these differences is key to making informed equity compensation decisions."  MORE >>

"[1] You sold any or all of the shares at the time of RSU vesting, option exercise, or ESPP purchase ... [2] You report a stock sale with the unadjusted cost basis shown on Form 1099-B from your broker ... [3] You report W-2 income received from equity compensation ... [4] You exercised incentive stock options and held the shares ... [5] You triggered the AMT from an ISO exercise/hold in an earlier tax year."  MORE >>

"[This article summarizes] the rules related to the year-end reporting requirements for ISO exercises on Form 3921 and ESPP transfers on Form 3922, and the penalties that could apply if a corporation fails to follow these rules."  MORE >>

"Requirement to report ... Electronic delivery requirements ... Format of statement/return ... Unique account numbers ... Electronic submission of IRS returns ... Submission through FIRE ... Submission through IRIS ... Internal Revenue Code penalties for non-compliance ... Disqualifying disposition of ISO shares ... Disposition of ESPP stock."  MORE >>

"[O]ptions-only LTI plans are losing popularity, especially for non-executives. New-hire option-only grants for this group are down 11% since 2024. Refresh grants fell even faster, dropping 14% over the same period.... RSU adoption has been climbing steadily across all employee segments, with the biggest jump in refresh grants for non-executives, up 11% since 2023.... Refresh grants have gotten smaller as companies juggle valuation pressure and the cost of bigger new-hire awards."  MORE >>

"For ISO exercises and ESPP transfers occurring in the 2024 calendar year, employers should file Copy A of the applicable forms with the IRS no later than February 28, 2025, for paper filers (March 31, 2025, for electronic filers). Copy B of the forms should be distributed to affected individuals no later than January 31, 2025."  MORE >>

"[1] Understand the vesting schedule of your restricted stock units (RSUs).... [2] Know how your company will withhold the taxes on your RSU shares.... [3] Have a plan for the RSU shares you will receive at vesting."  MORE >>

"[The] Internal Revenue Code requires that separate information returns be furnished to most U.S. taxpayers who exercised ISOs during 2025 or who transferred shares during 2025 that were acquired under an ESPP.... The deadline for furnishing Forms 3921 and 3922 to optionees and transferors is February 2, 2026. The deadline for filing Forms 3921 and 3922 with the IRS is March 2, 2026, if you physically mail the form, or March 31, 2026, if you send the form electronically."  MORE >>

"A 'Scenario of Least Regret,' presents a little-by-little approach that can balance the competing interests of ambition and anxiety. Dollar-cost averaging is an effective way to inch out of a concentrated stock position. Check your overconfidence level by considering what you have to lose. Reframe your thinking out of tunnel vision on the stock price and consider the things you actually want to accomplish in your life with your stock wealth.... Form a plan with an advisor just one stage at a time if necessary. Focus on what percentage of company stock you want to keep, i.e. your 'legacy anchor position.' "  MORE >>

"Auditing stock-based compensation is a complex process that requires management to have a thorough understanding of the types of awards granted to employees and retain underlying contracts in an organized fashion. As part of the financial statement audit process, your auditor will aim to ensure that stock-based compensation calculations and disclosures are accurate and comply with applicable accounting standards[.]"  MORE >>

"Nearly half of employees consider equity compensation ... a must-have benefit for a new job and view it as a critical tool to help achieve their retirement goals, according to a recent survey ... 37% of employees said equity compensation could help them learn more about investing, 32% said they could alleviate financial stress and another 32% said they could boost employee morale. Most notably, nearly 40% of employees said equity compensation could help them build or increase their wealth."  MORE >>

"[H]alf of survey respondents see equity compensation as a vital tool to attain retirement goals. According to the research, company stock encompasses nearly one-third of participants' investment portfolios. As a result, 72% of participants believe they'll very likely reach their retirement savings goals, while 44% plan to use the benefit to finance retirement."  MORE >>

"Pursuant to Code Section 83(b)(2), the election must be made not later than 30 days after the date of the Restricted Property transfer (i.e., the date of receipt by the service provider from the company). Late elections are not permitted.... While the online election mechanism will ease administrative difficulties for service providers, timely and proper filing remain critical components."  MORE >>

"Company equity is a powerful tool for compensating employees, attracting investors, and aligning the interests of key stakeholders with the long-term goals of the business. It is also a complex area that requires careful planning and consideration to avoid common pitfalls. Founders should consider the equity as a resource that dilutes existing ownership and look at the long-term implications of their decisions to allocate equity."  MORE >>

"The new Share Holder Allocation for Rewards to Employees Plan Act, or the SHARE Plan Act [HR 2332] ... provides a 3% tax rate reduction for US-domiciled companies that establish and maintain a SHARE plan, which is defined as a corporate program that grants common stock to employees periodically at no cost.... A key issue would be whether the tax benefit is enough to get companies to do this."  MORE >>

"Although the IRS previously required taxpayers to submit section 83(b) elections via physical mail, the IRS now permits taxpayers to submit Form 15620 online via the IRS website. Because of the importance of making a proper and timely section 83(b) election, taxpayers should consider making any such elections online."  MORE >>

"[E]ffective as of July 1, 2022, Puerto Rico Act No. 52-2022 amended the Puerto Rico Internal Revenue Code ... [to] allow for the operation of ESPPs in Puerto Rico.... [Some] publicly traded companies doing business in Puerto Rico are now allowing their Puerto Rico employees to participate in their ESPPs. This article summarizes the process that these companies should follow for including their Puerto Rico employees as participants in their U.S.-based ESPPs."  MORE >>

"For startup founders, a Section 83(b) Election can be a highly effective tax strategy, especially when the restricted equity value at the grant date is low and there is a strong potential for growth. That said, making the election is not without risk."  MORE >>

"New research ... finds that relative total shareholder return is lower and compensation higher among S&P 1500 firms that award performance share units (PSUs) versus time-based equity awards, i.e., restricted stock units (RSUs) and stock options."  MORE >>

"Donating wealth to charities and passing it along to future generations are important financial goals. What planning techniques are optimal if a large portion of your wealth comes from stock compensation?"  MORE >>

"While many owners of privately held businesses ... want to encourage key employees to 'think like shareholders,' they are reluctant to (or simply cannot) grant true equity interests to key employees.... [T]he answer for those privately held businesses that do offer an LTIP is a 'phantom' or 'synthetic' equity arrangement such as a Phantom Stock or Stock Appreciation Rights Plan. While each of these plan structures has certain advantages in specific situations, EBS has found the Performance Units Plan (PUP) format to be most flexible and effective in encouraging key employees to think and act like shareholders."  MORE >>

"In a start-up or early-stage company where the value of the company's stock often starts off low but has the potential for significant future appreciation, founders can potentially save taxes by making an 83(b) election.... If the restricted shares are forfeited (for example, because the employee quits before the vesting date) or the shares decrease in value, the employee may be limited in their ability to recoup the taxes already paid when the 83(b) election was made[.]"  MORE >>

"ESPPs drive account activity; employees in an ESPP log into NetBenefits 41% more often. Double-digit retirement savings results and longer tenure are seen at every income level, in every age group, and among both genders."  MORE >>