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Old 11-07-2014, 03:38 PM
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Question Request for a 409A Report

I am leaving a private company and within 90 days of my departure I will be exercising my stock options. Do I need to determine the current value of this stock so that I can claim the difference as income? Since this company's stock is not traded on the open market, how do I determine their current value? An executive at this company has told me that my CPA can request a copy of a 409A valuation report but that I cannot as an individual. Is that true? I use TurboTax so I don't have a CPA. Even if I do get a copy of this 409A report, I assume it won't be current data, as the valuation may have taken place weeks or most likely, months ago. Ayy help or insight would be appreciated.



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Old 11-09-2014, 12:42 PM
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I am leaving a private company and within 90 days of my departure I will be exercising my stock options. Do I need to determine the current value of this stock so that I can claim the difference as income?======== yes;stock options are contracts giving you a guaranteed strike price at which you can buy called call option or sell called put option a certain number of shares of a stock. Put options have intrinsic value only when the market price is less than the strike price, which allows you to sell the shares for more than the market price. If the market price is equal to or greater than the strike price, a put option's intrinsic value is zero. The intrinsic value equals the strike price minus the market price

Since this company's stock is not traded on the open market, how do I determine their current value?========= not traded on the open market; Valuation is a very complex issue and determining it is an expensive proposition; you shouldn't have to. You need to contact whoever is responsible for employee benefits in your company and request that the company provide a letter with the information you need, the FMV of the stock on the date of exercise or when restrictions lapse. Since your employer is providing these options to you, he should also provide the information you need foryour tax planning and for preparing your returns.

An executive at this company has told me that my CPA can request a copy of a 409A valuation report but that I cannot as an individual. Is that true?====I guess it depends. For non-qualified options, the employer may be required to report the spread between the fair market value of the stock and the option price as additional compensation with your payroll information, and to withhold payroll taxes.A stock option having an exercise price less than the FMV of the common stock determined as of the option grant date constitutes a deferred compensation arrangement. This typically will result in adverse tax consequences for the option recipient and a tax withholding responsibility for the company. The tax consequences include taxation at the time of option vesting rather than the date of exercise or sale of the common stock, a 20% additional federal tax on the optionee in addition to regular income and employment taxes, potential your state taxes and a potential interest charge. The company is required to withhold applicable income and employment taxes at the time of option vesting, and possibly additional amounts as the underlying stock value increases over time.

I use TurboTax so I don't have a CPA. Even if I do get a copy of this 409A report, I assume it won't be current data, as the valuation may have taken place weeks or most likely, months ago. Ayy help or insight would be appreciated.========= As the ESO is not traded on the open market; you have fewer options when it comes to selling the stock, and it typically takes much longer to do so. The lack of liquidity is a major reason that private firms are often valued lower than public ones,



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Old 01-30-2015, 12:01 PM
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Is my employer obligated to provide me with a copy of the 409A?

I work for a private company and would like to purchase my options. In order to raise the capital required, I need a copy of the 409A and I'm getting push back when I've requested a copy from the CFO. Does the law require that my employer provide me with a copy of this document if I request it?



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