Steve Magowan addresses the proposed change in taxation of options of S Corps with ESOPs and the possible far reaching ramifications of the legislation. Rob Edwards reviews 409a and the extension of transition relief for deferred compensation plans.
A summary look at the effects the 2014 Australian Federal Budget may have on you and your businesses as well as the economy. Post Budget presentation by Hanrick Curran, Chartered Accountants in Brisbane Australia
1 highlights of income tax provisions in budget 2018Subramanya Bhat
Highlights of Income Tax Provisions in Budget 2018
BUDGET 2018 HIGHLIGHTS – DIRECT TAXES
TAX RATES
No change in tax rates and basic exemption limit
Tax rates continue to be same for A.Y. 2019-20 as applicable for A.Y. 2018-19. Further, there is no change in the basic exemption limit.
Health and Education Cess
“Education Cess on income-tax” @2% and “Secondary and Higher Education Cess on income-tax” @1% is levied.
Proposed amendment: A new cess named “Health and Education Cess is proposed to be levied @ 4% of income-tax including surcharge, if applicable, in place of existing cess of “Education Cess and “Secondary and Higher Education Cess on income-tax”.
CIPM Public Policy brief 2019:Lagos Internal Revenue Service appoints employe...Olayiwola Oladapo
Effective from 1 January, 2019 the LIRS has appointed employers of Labour as its agents to deduct and remit Capital Gains Tax on loss of employment payments they made to employees as termination benefits. This public notice came on the heels of three other public notices issued by the LIRS in 2017. This brief from the Chartered Institute of Personnel Management (CIPM) examines the emerging trend in taxation laws and regimes in Lagos state since 2017 especially as it relates to employee compensation. It provides likely prognosis for organizations, the employee and HR Leaders/ managers. This brief also serve as a signpost for what to likely expect from other state Internal Revenue Services in 2019 as sub national governments at the state level desperately explore previously uncharted tax laws loopholes and strategies to raise their internally generated revenue base to address their burgeoning recurrent and capital budget requirements.
A summary look at the effects the 2014 Australian Federal Budget may have on you and your businesses as well as the economy. Post Budget presentation by Hanrick Curran, Chartered Accountants in Brisbane Australia
1 highlights of income tax provisions in budget 2018Subramanya Bhat
Highlights of Income Tax Provisions in Budget 2018
BUDGET 2018 HIGHLIGHTS – DIRECT TAXES
TAX RATES
No change in tax rates and basic exemption limit
Tax rates continue to be same for A.Y. 2019-20 as applicable for A.Y. 2018-19. Further, there is no change in the basic exemption limit.
Health and Education Cess
“Education Cess on income-tax” @2% and “Secondary and Higher Education Cess on income-tax” @1% is levied.
Proposed amendment: A new cess named “Health and Education Cess is proposed to be levied @ 4% of income-tax including surcharge, if applicable, in place of existing cess of “Education Cess and “Secondary and Higher Education Cess on income-tax”.
CIPM Public Policy brief 2019:Lagos Internal Revenue Service appoints employe...Olayiwola Oladapo
Effective from 1 January, 2019 the LIRS has appointed employers of Labour as its agents to deduct and remit Capital Gains Tax on loss of employment payments they made to employees as termination benefits. This public notice came on the heels of three other public notices issued by the LIRS in 2017. This brief from the Chartered Institute of Personnel Management (CIPM) examines the emerging trend in taxation laws and regimes in Lagos state since 2017 especially as it relates to employee compensation. It provides likely prognosis for organizations, the employee and HR Leaders/ managers. This brief also serve as a signpost for what to likely expect from other state Internal Revenue Services in 2019 as sub national governments at the state level desperately explore previously uncharted tax laws loopholes and strategies to raise their internally generated revenue base to address their burgeoning recurrent and capital budget requirements.
Greetings
Union budget for FY 2018-19 was presented by Hon'ble Finance Minister Shri. Arun Jaitely . As most of you are aware, this budget is unique being presented before election in 2019
EPA Presentation for Legislative Drafters - Ms. Allyson FrancisAntigua Epa
CARIFORUM-EU Economic Partnership Agreement - Trade in Services
Ms. S. H. Allyson FRANCIS, Trade in Services and Investment Specialist, EPA Implementation Unit, CARICOM Secretariat
This Financial Services Guide sets out the services that we can offer you. It is designed to assist you in deciding whether to use any of those services and contains important information about the services we off, how we can and others are paid, any potential conflict of interest we may have and our internal and external dispute resolution procedures and how you can access them. http://savillhickscorp.com.au/
1). The "Clawback" of erroneously awarded executive compensation and section 409A
2). Some administration tax proposals from the 2017 budget
3). Latest rating agencies' reports on life insurance industry
4). Failure to properly withhold non-qualifies plan FICA taxes - cases settled in favor of participants
5). Section 409A failure in retention agreement results in taxable income
Greetings
Union budget for FY 2018-19 was presented by Hon'ble Finance Minister Shri. Arun Jaitely . As most of you are aware, this budget is unique being presented before election in 2019
EPA Presentation for Legislative Drafters - Ms. Allyson FrancisAntigua Epa
CARIFORUM-EU Economic Partnership Agreement - Trade in Services
Ms. S. H. Allyson FRANCIS, Trade in Services and Investment Specialist, EPA Implementation Unit, CARICOM Secretariat
This Financial Services Guide sets out the services that we can offer you. It is designed to assist you in deciding whether to use any of those services and contains important information about the services we off, how we can and others are paid, any potential conflict of interest we may have and our internal and external dispute resolution procedures and how you can access them. http://savillhickscorp.com.au/
1). The "Clawback" of erroneously awarded executive compensation and section 409A
2). Some administration tax proposals from the 2017 budget
3). Latest rating agencies' reports on life insurance industry
4). Failure to properly withhold non-qualifies plan FICA taxes - cases settled in favor of participants
5). Section 409A failure in retention agreement results in taxable income
Published Spring 2011 in Boston Bar Association’s Business Law Section Newsletter
SES Advisors’ Rob Edwards coauthored this article, which summarizes the special treatment of ESOPs, explains how leveraged ESOPs work and discusses key ESOP valuation concepts that apply to ESOP transactions.
CBIZ Manufacturing & Distribution Quarterly Newsletter – June 2021CBIZ, Inc.
This issue newsletter tackles two of the hottest topics for the Manufacturing & Distribution sectors – supply chain challenges and the newly supercharged employee retention tax credit (ERTC). The article on innovations in employee benefits informs another critical operational issue – that of staffing – as employee benefits are key to recruiting and retaining qualified employees. Articles on managing insurance costs (and links to a pre-renewal data checklist) and how to work with the U.S. Commercial Service to access global markets round out this packed issue. As an added bonus, News from the NAM provides cutting edge industry commentary.
This article on your 2016 tax return and tax planning tips for nonqualified deferred compensation plans is reprinted with permission of myNQDC.com, a respected source of information, content, and tools on nonqualified deferred compensation.
Eight Key Questions for IRC § 409A Compliance -
The Gatekeeper to Structuring Effective Deferred Compensation Arrangements
Internal Revenue Code § 409A ("§409A") establishes several critical hurdles to tax deferrals by imposing a complex series of requirements governing plan documentation, the timing and content of elections to defer compensation, and the form and timing of the actual payment of deferred compensation. Failure to meet these requirements subjects the individual deferring the compensation to substantial additional tax penalties.
As a continuation of my last article, “tax the Rich…Tax the Rich…Tax the Rich…,” I asked Brian Seifert, CPA to fill in some additional tax changes that would affect our clients as we approach the year end and look forward to 2010. Brian is a new Aegis Council member who is helping our clients prepare for the onslaught of new taxes by identifying tax planning opportunities, assist the clients taking advantage of their planning opportunities then preparing the tax returns as part of the Aegis Council Tax Planning Package. Every Aegis Council member has undergone a thorough background check and peer reviews to insure only the best and brightest professionals are provided to our clients.
Not-for-Profit Compensation Controversies Continue to Add Fuel to the FireCBIZ, Inc.
Compensation in the not-for profit sector has been a consistent lightning rod for the IRS and other federal governing bodies, as well as for states, for many years.
This White Paper is written by Paul J. Smith, AIF and Gary Sutherland, CIC, MLIS from NAPLIA.
The paper discusses E&O Coverages basic procedures and how the industry has arrived at this point.
IRS Issues Post Windsor Cafeteria Plan GuidanceSES Advisors
As a result of the Windsor decision same gender marriages are recognized for Federal tax purposes if the couple is married in states that recognize same gender marriages regardless of where the couple may be domiciled (see ErisaALERT 2013-04). The IRS has issued Notice 2014-1 providing additional guidance relating to the impact of the Windsor decision on same gender marriages.
In this issue, ESOP Plan Administrator Kelly Irizarry outlines the small, but highly regulated element of tax reporting as part of the overall ESOP recordkeeping process. We also highlight a few of the ongoing community service projects performed by staff from the Philadelphia office.
When Nannu Nobis started Nobis Engineering in 1988, he wanted a company with an open and effective culture. Although many of the programs, policies, and procedures the company created then still exist today, the ownership culture at Nobis, like the company itself, has grown and developed.
Jane Rogers addresses how to locate missing participants and Steven Greenapple explains the various fiduciary issues raised when selling an ESOP company.
In this issue, Meg Shrum addresses financing in today's challenging lending market, Brian Wurpts discusses partial plan terminations, and Rob Edwards provides a timely reminder about the upcoming 409A deferred compensation compliance deadline.
Brian Wurpts explains the Employee Plans Compliance Resolution System (EPCRS) in his article "Operational Failures & Forgiveness." Mychelle Holloway discusses "What's New in ESOP Administration" for 2009.
Brian Wurpts discusses how an ESOP company's funding decisions can alleviate or exacerbate the "Have/Have Not" problem and ESOP sustainability concerns. Steve Magowan explains how to avail yourself of the protective provisions of IRS Notice 2010-6 for nonqualified deferred compensation plans.
Mary Beth Gray provides a "how to" of the issues you need to consider when creating a distribution policy, and what is or is not permitted by the IRS. Tabitha Croscut discusses diversification language in plans and what the IRS decided was the definition of a "qualified participant."
Diane Fanelli discusses rebalancing as an option for ESOPs. Barbara Krumbhaar details all you need to know about plan record retention including what documents should be kept, for how long and by whom. Steven Greenapple answers a frequently asked client question about whether a pass-through vote is needed for an ESOP company stock sale.
Diane Fanelli follows up her last article on rebalancing with a summary of reshuffling. Brian Wurpts discusses the basics of distributions, then presents some options for funding benefit distributions and the implications of benefit funding decisions on repurchase obligation.
Brian Wurpts addresses share redemption and share re-leveraging as other strategies to manage plan funding decisions, and their implications on repurchase obligation, in Part II of an article that appeared in the August 2011 Client Alert. Mychelle Holloway discusses when and how to use the new Form 8955-SSA, and all about the changes to the Form 5558, released by the Internal Revenue Service earlier this year.
Client Alert: August 2012
Alice Simons discusses the primary objectives of the ESOP advocacy efforts in Congress and explains how you can schedule and prepare for a visit with your member of Congress. Brian Wurpts discusses strategies for mature ESOP companies to utilize their excess capital, with a focus on the option of distributing plan assets to participants.
Client Alert: December 2012 - 25th Anniversary IssueSES Advisors
Celebrating 25 years of creating employee ownership, in this issue we interview our Chairman and Founder, Jim Steiker. We also share photos from recent client events in Philadelphia and Las Vegas.
In this issue, new SFE&G partner Theresa Borzelli and guest co-author Mary B. Anderson of ERISAdiagnostics Inc. discuss the timely issue of shared responsibility regarding health coverage (Pay or Play). Mychelle Holloway explains why your record keeper requests certain information from the plan sponsor. Also read about SES' recent promotions and new hires
In this issue, Brian Wurpts explains how SES Advisors applies its expertise in plan design, finance, feasibility and record keeping to help ESOP companies develop sustainable ESOP practices. Also read about our new office in Vermont and upcoming ESOP events.
Published 2004 in the Journal of Employee Ownership Law and Finance
Co-authored by Jim Steiker, this article reviews the legal standards that govern ESOP committees.
RMD24 | Retail media: hoe zet je dit in als je geen AH of Unilever bent? Heid...BBPMedia1
Grote partijen zijn al een tijdje onderweg met retail media. Ondertussen worden in dit domein ook de kansen zichtbaar voor andere spelers in de markt. Maar met die kansen ontstaan ook vragen: Zelf retail media worden of erop adverteren? In welke fase van de funnel past het en hoe integreer je het in een mediaplan? Wat is nu precies het verschil met marketplaces en Programmatic ads? In dit half uur beslechten we de dilemma's en krijg je antwoorden op wanneer het voor jou tijd is om de volgende stap te zetten.
Kseniya Leshchenko: Shared development support service model as the way to ma...Lviv Startup Club
Kseniya Leshchenko: Shared development support service model as the way to make small projects with small budgets profitable for the company (UA)
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Digital Transformation and IT Strategy Toolkit and TemplatesAurelien Domont, MBA
This Digital Transformation and IT Strategy Toolkit was created by ex-McKinsey, Deloitte and BCG Management Consultants, after more than 5,000 hours of work. It is considered the world's best & most comprehensive Digital Transformation and IT Strategy Toolkit. It includes all the Frameworks, Best Practices & Templates required to successfully undertake the Digital Transformation of your organization and define a robust IT Strategy.
Editable Toolkit to help you reuse our content: 700 Powerpoint slides | 35 Excel sheets | 84 minutes of Video training
This PowerPoint presentation is only a small preview of our Toolkits. For more details, visit www.domontconsulting.com
Recruiting in the Digital Age: A Social Media MasterclassLuanWise
In this masterclass, presented at the Global HR Summit on 5th June 2024, Luan Wise explored the essential features of social media platforms that support talent acquisition, including LinkedIn, Facebook, Instagram, X (formerly Twitter) and TikTok.
Cracking the Workplace Discipline Code Main.pptxWorkforce Group
Cultivating and maintaining discipline within teams is a critical differentiator for successful organisations.
Forward-thinking leaders and business managers understand the impact that discipline has on organisational success. A disciplined workforce operates with clarity, focus, and a shared understanding of expectations, ultimately driving better results, optimising productivity, and facilitating seamless collaboration.
Although discipline is not a one-size-fits-all approach, it can help create a work environment that encourages personal growth and accountability rather than solely relying on punitive measures.
In this deck, you will learn the significance of workplace discipline for organisational success. You’ll also learn
• Four (4) workplace discipline methods you should consider
• The best and most practical approach to implementing workplace discipline.
• Three (3) key tips to maintain a disciplined workplace.
Company Valuation webinar series - Tuesday, 4 June 2024FelixPerez547899
This session provided an update as to the latest valuation data in the UK and then delved into a discussion on the upcoming election and the impacts on valuation. We finished, as always with a Q&A
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𝐓𝐉 𝐂𝐨𝐦𝐬 (𝐓𝐉 𝐂𝐨𝐦𝐦𝐮𝐧𝐢𝐜𝐚𝐭𝐢𝐨𝐧𝐬) is a professional event agency that includes experts in the event-organizing market in Vietnam, Korea, and ASEAN countries. We provide unlimited types of events from Music concerts, Fan meetings, and Culture festivals to Corporate events, Internal company events, Golf tournaments, MICE events, and Exhibitions.
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"𝐄𝐯𝐞𝐫𝐲 𝐞𝐯𝐞𝐧𝐭 𝐢𝐬 𝐚 𝐬𝐭𝐨𝐫𝐲, 𝐚 𝐬𝐩𝐞𝐜𝐢𝐚𝐥 𝐣𝐨𝐮𝐫𝐧𝐞𝐲. 𝐖𝐞 𝐚𝐥𝐰𝐚𝐲𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞 𝐭𝐡𝐚𝐭 𝐬𝐡𝐨𝐫𝐭𝐥𝐲 𝐲𝐨𝐮 𝐰𝐢𝐥𝐥 𝐛𝐞 𝐚 𝐩𝐚𝐫𝐭 𝐨𝐟 𝐨𝐮𝐫 𝐬𝐭𝐨𝐫𝐢𝐞𝐬."
Enterprise Excellence is Inclusive Excellence.pdfKaiNexus
Enterprise excellence and inclusive excellence are closely linked, and real-world challenges have shown that both are essential to the success of any organization. To achieve enterprise excellence, organizations must focus on improving their operations and processes while creating an inclusive environment that engages everyone. In this interactive session, the facilitator will highlight commonly established business practices and how they limit our ability to engage everyone every day. More importantly, though, participants will likely gain increased awareness of what we can do differently to maximize enterprise excellence through deliberate inclusion.
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Enterprise Excellence is a holistic approach that's aimed at achieving world-class performance across all aspects of the organization.
What might I learn?
A way to engage all in creating Inclusive Excellence. Lessons from the US military and their parallels to the story of Harry Potter. How belt systems and CI teams can destroy inclusive practices. How leadership language invites people to the party. There are three things leaders can do to engage everyone every day: maximizing psychological safety to create environments where folks learn, contribute, and challenge the status quo.
Who might benefit? Anyone and everyone leading folks from the shop floor to top floor.
Dr. William Harvey is a seasoned Operations Leader with extensive experience in chemical processing, manufacturing, and operations management. At Michelman, he currently oversees multiple sites, leading teams in strategic planning and coaching/practicing continuous improvement. William is set to start his eighth year of teaching at the University of Cincinnati where he teaches marketing, finance, and management. William holds various certifications in change management, quality, leadership, operational excellence, team building, and DiSC, among others.
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RMD24 | Debunking the non-endemic revenue myth Marvin Vacquier Droop | First ...BBPMedia1
Marvin neemt je in deze presentatie mee in de voordelen van non-endemic advertising op retail media netwerken. Hij brengt ook de uitdagingen in beeld die de markt op dit moment heeft op het gebied van retail media voor niet-leveranciers.
Retail media wordt gezien als het nieuwe advertising-medium en ook mediabureaus richten massaal retail media-afdelingen op. Merken die niet in de betreffende winkel liggen staan ook nog niet in de rij om op de retail media netwerken te adverteren. Marvin belicht de uitdagingen die er zijn om echt aansluiting te vinden op die markt van non-endemic advertising.
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As an Army veteran dedicated to lifelong learning, I bring a disciplined, strategic mindset to my pursuits. I am constantly expanding my knowledge to innovate and lead effectively. My journey is driven by a commitment to excellence, and to make a meaningful impact in the world.
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Client Alert: November 2007
1. November 2007
STEIKER, FISCHER, EDWARDS & GREENAPPLE, P.C.
CLIENT ALERT
PROPOSED CHANGE IN TAXATION
OF OPTIONS FOR S CORPS WITH ESOPS
COULD HAVE FAR REACHING RAMIFICATIONS
Written by: Stephen P. Magowan
T
here is an important development in Washington of
which all ESOP companies
and companies thinking of adopting
ESOPs must be aware. We also believe
this is an issue on which all such companies and their employees must become engaged. Here is what is happening.
Proposed Change
On October 25, 2007, Representative
Charles Rangel, Chair of the House
Ways and Means Committee, introduced H.R. 3870. Though this is just
the beginning of what will be a long
process, Representative Rangel is perhaps the single most important Representative in Congress when it comes to
bills relating to taxes.
The stated goal of H.R. 3870 is “to
provide additional tax relief to low and
moderate income individuals, to repeal
the individual alternative minimum
tax, [and] to reform the corporate income tax.” Buried near the very end of
this bill is a provision that will harm S
corporation ESOPs by imposing severe
tax consequences on S corporations
with ESOPs that use options and warrants in compensation programs and
in financing arrangements.
H.R. 3870 would create a new Code
Section 409B called “Recognition of
Ordinary Income on Sale or Exercise
of Stock Option in S Corporation with
an ESOP.” (Apparently federal budget
constraints are so great that they limit
Congress’s ability to use articles like
What we do know, however,
is that ESOPs - - and in
particular S ESOPs - - are on
the Congressional radar
screen as a potential source
of raising revenues.
“the” and to use the plural when necessary!)
Under Section 409B, if a person holds
an option or warrant in an S corporation that also has adopted an ESOP,
then when that person sells or exercises that option or warrant, he or she
will have to recognize ordinary income
as follows. When the holder exercises
or sells the option, he or she would
have to go back to the date that the
option was granted and treat him or
herself, from that date to the date of
sale or exercise, as if he or she was a
shareholder. Then, he or she would
have to determine how much income
or loss would have been allocated to
his or her shares rather than to the
ESOP shares if the option or warrant
had been exercised on the date of
grant.
Finally, the holder must (a) include
this amount in taxable income in the
year of the sale or exercise and (b) pay
2. Proposed Change in Taxation for S Corps
interest on the taxes associated with
this income at the underpayment penalty rate for each year he or she would
have been allocated income pursuant
to the deemed exercise.
Please note: These provisions are to apply only to options granted after the
date of enactment of the law. Holders
of existing options are not impacted by
this law as drafted. Also, the income
recognized under 409B is added to the
holder’s tax basis in the option. The
impact of this, however, is essentially
to convert capital gain for holders of
incentive stock options and nonemployment related options and warrants to ordinary income.
How might the numbers work roughly?
Let’s say you have an S corporation
with 100 shares outstanding all of
which are held by the ESOP. You own
an option for 5 shares that you exercise
in Year 2. In Year 1 when you were
granted the option, the corporation
has $100,000 of profit, all which is
deemed allocated to the ESOP. If you
had been a shareholder, only $95,238
would have been allocated to the
ESOP (100/105 * $100,000). The
difference of $4,762 will ultimately be
allocated to you when you exercise the
option and you will pay an interest
charge on the tax on that amount.
The $4,762 will be added to your basis
in the option and decrease your gain
on exercise, though it also may in essence convert capital gain to ordinary
income. Plus you will pay tax on the
difference between the exercise price of
the option and the value of the stock
on the date of exercise.
Larger Impacts of this Change
New Section 409B, if enacted in its
current form, would apply to options,
warrants, restricted stock, stock appreciation rights, phantom stock units, or
any similar right to a future cash payment based on the value of such stock
or appreciation in such value. Clearly,
this section would penalize S corporation ESOP companies that want to use
such rights as compensation tools. In
addition, and perhaps even more
gravely, warrants are frequently used in
the financing of S corporation ESOP
acquisitions. These provisions, if enacted, will drive up the costs of such
financing.
Just the Beginning
This is just the opening salvo in what
promises to be a long and drawn out
Congressional process over tax reform.
No one can predict what the ultimate
product of such reform will be. What
we do know, however, is that ESOPs - and in particular S ESOPs - - are on
the Congressional radar screen as a
potential source of raising revenues.
We will be monitoring the situation
closely. We will keep you informed
and be active in the discussion in
Washington and with Representative
and Senators.
What You Should Be Doing
For several years now, the ESOP Association, the national lobbying organization for ESOPs, has been warning us
that developments in Washington
could be making ESOPs vulnerable to
adverse legislative change. H.R. 3870
tells us that the wolf has arrived. In
the struggle to come to grips with the
federal budget deficit and the increasing reach of the alternative minimum
tax, there will be winners and losers as
Congress grapples with hard choices.
ESOP Association chapters around the
country are starting a process with
chapter members to make sure your
local Representatives and Senators understand that ESOP employees are
actual living, breathing – and voting –
people. To make this work, our politicians must be brought in contact with
those employees so that they can understand the ESOP connection to
greater productivity, better benefits
and better jobs rooted in the community. If you are not a member of the
ESOP Association, we would urge that
you consider joining now. If you are a
member, we urge you to get involved
in this work.
If you have questions about getting
involved with your chapter, contact
your chapter president or feel free to
contact us and we will help you find
the right person to talk with either
here at SFEG or in your chapter.
2
3. IRS EXTENDS TRANSITION RELIEF
FOR DEFFERED COMPENSATION PLANS
Written by: Robert W. Edwards
O
n October 22, 2007, the
Treasury Department and
the IRS published Notice
stock appreciation rights (SAR) plans
requirements, provided that a change
may be subject to 409A. A nonqualified stock option or SAR plan gener-
cannot 1) accelerate any payment into
the year of election, or 2) defer into a
2007-86 extending through 2008 the
time within which deferred compensa-
ally will not be subject to 409A if it
meets the following tests.
later tax year amounts payable in the
year of election. For example, a tax-
1. Options or SARs granted under the plan must relate to common
payer could not in 2008 elect a distribution payable in 2008, or defer an
amount otherwise due in 2008.
tion plans must be amended to comply
with Section 409A of the Internal
Revenue Code. Section 409A became
effective January 1, 2005. Its broad
reach extends beyond traditional deferred compensation plans and supplemental executive retirement plans to
include severance benefits under employment agreements, executive bonus
plans, long-term incentive plans, split
dollar insurance arrangements, and
even certain expense reimbursement
arrangements. 409A contains strict
rules on elections and distributions
under covered deferred compensation
plans and imposes substantial tax penalties on participants in deferred compensation plans that do not comply
with 409A.
Effect of 409A on Stock Rights Plan.
ESOP companies often provide equity
based compensation for executives, in
additional to coverage under their
ESOP, including stock option, phantom stock and stock appreciation
rights (“SAR”) plans. 409A applies to
some (but not all) stock rights plans.
Phantom stock arrangements are always subject to 409A; qualified incentive stock options are never subject to
409A; nonqualified stock options and
stock (no dividend preferences are
permitted) of the service recipient
(employer) company.
2. The option price can never be
less than the fair market value of the
stock at the date of grant. In the case
of a SAR, the payment cannot exceed
the difference between the stock’s fair
market value at the date the SAR is
exercised and its fair market value at
the date of grant.
3. The option or SAR may not
include any feature for the deferral of
compensation (i.e., option shares must
be delivered promptly upon exercise of
the option, and SAR payments must
be made promptly in a lump sum upon
exercise of the SAR)
Transition Relief. During the transition period taxpayers can continue to
change elections as to the form and
timing of payments under deferred
compensation plans without violating
409A. This relief is particularly useful
for amending stock option and SAR
grants so that they will not be subject
to 409A. The transition relief allows
Good faith compliance required
through 2008. For the remainder of
2007 and 2008, good faith compliance
with 409A and prior guidance will generally be sufficient. However, a plan
will not be deemed to be operating in
good faith compliance if discretion is
exercised in a manner that violates
409A. All plans must be amended to
comply with 409A by January 1, 2009.
The Treasury
and IRS expect to issue guidance
shortly with respect to a correction
program that will permit taxpayers to
Correction Program.
correct certain unintentional operational violations of 409A.
What To Do Now. If you haven’t already identified and amended your
deferred compensation plans subject to
409A, breathe a sigh of relief, but
don’t wait for long. Notice 2007-86
will be the last extension, and prompt
action is recommended to ensure that
your deferred compensation plans
comply with 409A before benefits are
paid out.
changes to conform with the 409A
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4. WHO IS NEW AT SFE&G AND SES ADVISORS?
Stephen P. Magowan
Kyle Coltman
Steiker, Fischer, Edwards & Greenapple, P.C. is proud to
announce the addition of Stephen P. Magowan as a Partner in charge of its new Burlington, Vermont office. Steve
brings more than a dozen years of experience as an attorney and advisor to ESOP companies and trustees and will
add new depth to the team of professionals here at
SFE&G with his extensive experience in complex estate
planning for business owners.
In spring 2007, Kyle Coltman joined SES Advisors as a
Managing Director. Kyle will be responsible for feasibility
assessment, deal structure and financing of ESOP transactions, resident in the firm’s newly created West Coast office.
Prior to joining SFE&G, Steve was a partner with Gravel
& Shea. Steve received his law degree in 1988 from Washington University in Saint Louis, Missouri.
He is a member of the Chittenden County, Vermont, and
New York Bar Associations, as well as the American Bar
Association where he sits on the Estate Planning and Estate Administration for Business Owners Committee.
Mr. Magowan lives in Burlington, Vermont with his wife
and two children. Please welcome Steve by calling him at
802.860.4077 or by emailing him at smagowan@sfeglaw.com
Kyle has over 27 years of experience in the field of ESOPs
and has supervised several hundred ESOP buyouts for
owners of privately-held companies. Prior to joining SES
Advisors, Kyle was the CEO of Menke & Associates, the
oldest ESOP advisory firm in the country.
Mr. Coltman graduated with honors from the University
of California, San Diego, receiving a B.A. degree in Economics. He completed his M.B.A. degree in Finance at the
University of California, Berkeley.
Mr. Coltman will be located in Palo Alto, California.
Please welcome him to the firm by calling 650.617.3355 or
by emailing kcoltman@sesadvisors.com.
Meg Shrum
Jane Rogers
SES Advisors is thrilled to announce the addition of Jane
Rogers as a Senior Plan Administrator. Jane will provide
professional ESOP administration and consulting services
as well as assist in the marketing of SES Advisors' ESOP
administration services.
Jane comes to SES Advisors from First Niagara Benefits.
Prior to that she worked for Blue Ridge ESOP Associates,
where she was the Director of Plan Administration. Jane
has over 9 years of experience in ESOP administration.
Ms. Rogers will be located in Fairport, New York. Feel free
to welcome her by calling 585.385.0819 or by emailing
jrogers@sesadvisors.com.
10 Shurs Lane
Suite 102
Philadelphia, PA 19127
6 South Street
Suite 201
Morristown, NJ 07960
SES Advisors is excited to welcome Meg Shrum as Senior
Vice President. She will be involved in every aspect of our
ESOP practice with emphasis on business development,
feasibility analysis, deal structure and financing.
Meg comes to SES Advisors from the National Cooperative Bank, where she became one of the nation’s most active and experienced ESOP lenders. Prior to joining
NCB, Meg was a Managing Director with Riggs National
Bank’s Domestic Private Banking Division in Washington
DC. She is a native to North Carolina and earned her
MBA in entrepreneurship from the University of Arizona.
Ms. Shrum will be remaining in the DC area in our newlyformed satellite office in Lake Anna, Virginia. Feel free to
welcome her by calling 540.872.4601 or by emailing
mshrum@sesadvisors.com.
The Foundry Corporate Office Center
235 Promenade Street, Suite 497
Providence, RI 02908
156 College Street
3rd Floor
Burlington, VT 05401
4