Tax reporting for equity compensation is one of the most complicated areas of ASC 718.
It’s not because of the concepts themselves. Deferred taxes, and the differences between GAAP and the IRS tax code, are easy enough to understand. But they’re subject to a myriad of special rules and issues. As a result, their application—across vast amounts of equity award data, granting jurisdictions, equity award types, and corporate circumstances—creates significant complexity and audit risk.
COVID-19 is a reminder that scenario modeling across a range of possible outcomes is essential to avoiding surprises on the income statement.
Gain insight into common equity compensation tax issues, including IRS section 162(m), employee mobility, tax settlement forecasting, and FICA taxes for retirement eligible employees.
Tax reporting for equity compensation isn’t for the faint of heart. Here are the main sources of risk you need to know about.
International Financial Reporting Standards (IFRS) provides a globally converged accounting framework that individual countries can use in place of their local, generally accepted accounting principles (GAAP).
Takis Makridis · 3/18/2019
Which outstanding equity awards would be grandfathered under the 162(m) updates? IRS Notice 2018-68 gives an answer to this question.
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.
This updated white paper provides an overview of the key considerations when assuming share-based compensation awards in a business combination.
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.
Takis Makridis · 5/14/2018
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.
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.
Daniel Hunninghake, CPA · 3/5/2018
If your company’s fiscal year ends on any date other than December 31, application of the new tax rate gets tricky. The reason? IRC Section 15(a).
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.
For some weeks, Congress has been working on a tax reform plan for the president to sign. How will the proposed legislation affect equity compensation?
Takis Makridis · 12/11/2017
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.
We spoke with Bloomberg about their study of the aftermath of Accounting Standards Update 2016-09 (ASU 2016-09). Here’s a summary and a link to their article.
Takis Makridis · 9/10/2017
A thorough walk-through of how employee mobility complicates both the expense and tax reporting for equity awards.
In March 2016, the FASB issued Accounting Standards Update No. 2016-09, finalizing its initiative to simplify and improve ASC 718 for employee share-based payment awards.
Tax settlement forecasting is becoming increasingly important. If the FASB’s ASC 718 revisions go through, it will be all but necessary.