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

A live 90-minute premium CLE/CPE webinar with interactive Q&A


Thursday, November 19, 2020

1:00pm-2:30pm EST, 10:00am-11:30am PST

or call 1-800-926-7926

This CLE/CPE webinar 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.

Description

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.

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Outline

  1. Basic elements of the Section 83(i) election
  2. Eligibility
  3. Withholding and notice
  4. Possible pitfalls

Benefits

The panel will review these and other significant concepts:
  • Adopting a qualified equity grant plan
  • Employee eligibility and inclusion
  • Taxation of the deferred transfer
  • Risks of the election
  • Practical administrative issues

Faculty

Fosse, J. Marc
J. Marc Fosse

Director
Trucker Huss

Mr. Fosse focuses on all the tax, securities, corporate and accounting issues related to executive and equity...  |  Read More

Oringer, Andrew
Andrew L. Oringer

Partner
Dechert

Mr. Oringer is co-chair of his firm's ERISA and Executive Compensation group, and leads the firm’s...  |  Read More

Smith, Stefan
Stefan P. Smith

Partner
Locke Lord

Mr. Smith has extensive experience in employee benefits and executive compensation law. He works with both public and...  |  Read More

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