IRC 83(i) Election for Qualified Equity Grants: Deferral Opportunities for Stock Options and RSUs
Determining 80% Employee Threshold, Mechanics of Election, Tax Treatment of Deferrals
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
ERISA
- event Date
Thursday, November 19, 2020
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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BARBRI is a NASBA CPE sponsor and this 110-minute webinar is accredited for 2.0 CPE credits.
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BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).
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This CLE/CPE course will provide tax advisers with a practical guide to the deferral benefits of Section 83(i) qualified equity grant election contained in the 2017 tax reform law. The panel will detail what constitutes a qualified grant of stock eligible for deferral treatment, discuss the mechanics of making the election, and describe the latest IRS guidance. The webinar will also detail potential drawbacks that firms and employees should consider when making the election.
Mr. Fosse focuses on all the tax, securities, corporate and accounting issues related to executive and equity compensation arrangements. He works with publicly traded, private, non-profit and government clients in the design, implementation and operation of domestic and international executive nonqualified and supplemental deferred compensation plans, as well as equity-based and other long-term incentive compensation arrangements. He regularly advises clients regarding handling employee benefit matters in corporate mergers, acquisitions, divestitures, initial public offerings and other corporate transactions.
Mr. Oringer is co-chair of his firm's ERISA and Executive Compensation group, and leads the firm’s national fiduciary practice in New York. He counsels clients on their employee benefit plans and programs, benefits-related tax matters and fiduciary issues arising in connection with the investment of employee benefit plan assets. His practice includes advising clients regarding ERISA and employee benefits generally, including 401(k) and other retirement plans as well as medical and other welfare plans. His advice to clients encompasses all aspects of corporate transactions and initial public offerings in which benefits and compensation issues play a central part.
Mr. Smith utilizes his in-depth background in employee benefits and executive compensation law to advise public and private companies on establishing and ensuring the continued compliance of tax-qualified defined contribution and defined benefit retirement plans and all forms of executive compensation arrangements. He counsels clients on employee benefits matters that arise during mergers and acquisitions, finding solutions, and helping the deals to move forward. He also works with various health and welfare plans and executive and equity-based compensation. These include incentive and non-qualified stock options, restricted stock awards, stock appreciation rights, employee stock purchase plans, profits interests, phantom equity, performance unit and bonus plans, SERPs and other excess benefit plans, and non-qualified deferred compensation plans.
Section 83(i) allows eligible private companies to adopt qualified equity grant plans for issuing stock options or restricted stock units (RSUs) to eligible employees in exchange for the performance of services. A significant advantage of this election is that it requires no income tax payment when granted and allows the employee to defer income taxation for a period of up to five years after vesting. Additionally, the vested stock immediately qualifies for long-term capital gains treatment.
Section 83(i) requires companies to offer equity grants to 80 percent of their eligible employees. Employers considering implementing a qualifying grant program face several additional administrative and potential financial burdens, including meeting plan qualifications, complying with 83(i) notification requirements, and satisfying any applicable tax withholding requirements.
Employee concerns include timely and appropriately making the election and paying the employment taxes at the time of the option or RSU grant. Recipients also face the possibility that the value of the stock will decrease during the deferral period.
Listen as the panel discusses the eligibility requirements under 83(i), the mechanics of making the election, and its risks and rewards.
- Basic elements of the Section 83(i) election
- Eligibility
- Withholding and notice
- Possible pitfalls
- Adopting a qualified equity grant plan
- Employee eligibility and inclusion
- Taxation of the deferred transfer
- Risks of the election
- Practical administrative issues
Learning Objectives
After completing this course, you will be able to:
- Identify eligible companies
- Recognize situations where the 83(i) election applies
- Ascertain employees eligible to make the election
- Determine the tax impact of making the election
- Field of Study: Taxes
- Level of Knowledge: Intermediate
- Advance Preparation: None
- Teaching Method: Seminar/Lecture
- Delivery Method: Group-Internet (via computer)
- Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
- Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex audits and schedules; supervisory authority over other auditors/accountants. Knowledge and understanding of Section 83(l) elections, tax treatment of deferred compensation and stock options; familiarity with IRS IRS and Department of Labor audit procedures and enforcement.
Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.
Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).
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