Hot Topic: Tax Reporting for Stock-Based Compensation

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.

Here’s where you’ll find all our publications unpacking the topic. Need more? We’re here to help. Look into our tax reporting services or just contact us directly.

Tax Settlement Forecasting During High-Volatility Periods

COVID-19 is a reminder that scenario modeling across a range of possible outcomes is essential to avoiding surprises on the income statement.

Daniel Hunninghake, CPA and Matt Gabrielson · 6/10/2020

Demystifying Tax Reporting for Share-Based Payment Awards

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.

Daniel Hunninghake, CPA and Yudian Tang · 12/5/2019

The Intrepid Tax Leader

Tax reporting for equity compensation isn’t for the faint of heart. Here are the main sources of risk you need to know about.

Daniel Hunninghake, CPA and Takis Makridis · 3/19/2019

Converged or Deconverged: Comparing IFRS 2 and ASC 718

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

Deferred Tax Assets after Tax Reform and IRS Notice 2018-68

Which outstanding equity awards would be grandfathered under the 162(m) updates? IRS Notice 2018-68 gives an answer to this question.

Takis Makridis and Daniel Hunninghake, CPA · 9/10/2018

Tax Settlement Forecasting: The Best Response to Income Statement Volatility

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.

Daniel Hunninghake, CPATakis Makridis, and Fori Wang · 7/15/2018

Accounting for Awards in a Business Combination

This updated white paper provides an overview of the key considerations when assuming share-based compensation awards in a business combination.

Takis Makridis and Daniel Hunninghake · 6/19/2018

Executive Compensation Performance Metrics and Tax Reform

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

Tax Accounting for Equity Compensation Awards

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.

Daniel Hunninghake, CPATakis Makridis, and Yuxi Chen · 3/12/2018

FICA Tax Withholding for 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

Tax Reform Implications for Fiscal Year Companies

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).

Boxian Kolb, CPA and Takis Makridis · 2/21/2018

The Latest on Tax Reform and Equity Compensation

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.

Takis Makridis and Boxian Kolb, CPA · 1/4/2018

Tax Reform and the Potential Effects on Equity Compensation

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

Issuing Equity Abroad: Top Tax Challenges of International Subsidiaries

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.

Arjun Sathya and Takis Makridis · 9/11/2017

Fortune 500 Sees First Signs of Tax Volatility from ASU 2016-09

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

Mobility Tracking and Your Equity Award Accounting

A thorough walk-through of how employee mobility complicates both the expense and tax reporting for equity awards.

Takis Makridis and Yuxi Chen · 6/14/2017

FASB’s Amendments to ASC 718 as per Accounting Standards Update No. 2016-09

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.

Takis Makridis, Boxian Kolb and Xiao Yu  · 5/1/2016

Get Ready for Big Changes in Deferred Tax Accounting

Tax settlement forecasting is becoming increasingly important. If the FASB’s ASC 718 revisions go through, it will be all but necessary.

Daniel Hunninghake, CPA and Takis Makridis · 6/2/2015