Transform your deferred tax reporting—while keeping the expense software you have.
Myriad rules and issues under ASC 718 and ASC 740 complicate tax accounting for share-based compensation. Equity Methods can help you get them all under control.
Streamline and automate deferred tax reporting processes.
What’s the value of share-based payment awards? The accounting rules say it’s their cost on the date of grant. The tax rules say it’s their cost at settlement—often many years later. We calculate, allocate, and reconcile compensation expense under GAAP and tax rules. At the same time, we apply technology and other productivity improvements to take labor and guesswork out of the process.
Customize deferred tax reporting to your unique circumstances.
Equity Methods can manage your ongoing tax reporting, from upfront deferred tax asset (DTA) to downstream unwinding. International jurisdictions, globally mobile employees, acquisitions with assumed awards—whatever your specific circumstances, we can handle them. We tailor each process to your specific award type, reporting requirements, and systems.
Forecast future tax settlements to avoid surprises.
The elimination of the APIC pool under ASU 2016-09 introduced volatility to net income and the effective tax rate. Now, any tax benefits and tax deficiencies associated with share-based compensation must go through the income statement. In a bull market, that could be a boon. In a bear market, maybe the opposite.
We can help you deal with this source of uncertainty by running forecasts to determine the effects of different stock prices and tax rates on the income statement. We can also develop historical backtests to show how financials would have looked without an APIC pool or how elimination of the APIC pool could affect the P&L.
Learn more about tax reporting for equity shares.
Like it or not, corporate finance and tax teams are now on the hook for forecasting excess tax benefits from stock-based compensation. Here’s a refresher on the current deferred tax model, along with perspectives on the different ways a tax settlement forecasting process can be designed. Get the issue brief >
Which outstanding equity awards would be grandfathered under the 162(m) updates? IRS Notice 2018-68 gives an answer to this question. Read the blog post >
Master the fundamentals of one of the more nuanced areas of share-based compensation. Our white paper answers hard questions about FASB and IRS rules, from deferred tax assets (DTAs) to recharge agreements and retirement eligible awards. Get the white paper >
Foreign subsidiaries of US-listed companies have a host of IFRS and local tax reporting obligations that often fly under the radar. We’ve unpacked some of these issues and their implications for both the consolidated financials and local tax compliance. Read the blog post >
Read our Ethical Boardroom article (coauthored with Kelly Malafis of Compensation Advisory Partners) on the top five lessons of tax reform with respect to executive compensation and performance goal-setting. Download the article >
FICA taxes are due on equity compensation when there is no longer a risk of forfeiture. Retirement eligibility is an often-overlooked trigger with many administration and accounting impacts to consider. Get the issue brief >
Immediately after the Tax Cuts and Jobs Act became law, we looked into the effects that new rules had for share-based compensation, including a major true-down of DTAs, radical changes to IRS Section 162(m), and a new way for private-company employees to participate in value creation outside of a liquidity event. Get the issue brief >
Tax is one of the most complicated areas of stock compensation accounting. Granting jurisdictions, equity award types, corporate circumstances—these and more can trigger significant complexity and audit risk. Transform your tax reporting for equity shares with a global framework that brings automation, efficiency, and control.
We welcome a chance to discuss your needs, either formally or informally.