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By Alex Hodgkin
At three hundred ninety-seven pages, Section 409A is incredibly lengthy and complex. However, it does outline some reasonably clear approaches that help when it comes to developing compensation policies that comply with its provisions. These presumptive methods, known as safe harbors, shift the burden of proof of noncompliance to the IRS, if, and only if, implemented properly. All that really means is that if a company employs a safe harbor method to value the price of its stock options, the IRS must show that the company was grossly unreasonable in calculating the fair market value of the underlying security before it can claim any wrongdoing.
The last but not least of the three articles on 409A compliance, this one addresses the key: Finding qualified appraisers.
The first in a series of three articles on the complexity of 409a compliance by leading valuation firm Arcstone Partners
What better service can you get than legal videos at your fingertips?
Understanding 409A compliance will save tax dollars for you and your employees.
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