Private Company Stock Options: Determining Fair Market Value in ...

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Agenda • Discussion of the Law • Valuations – Quasi Safe Harbors • Case Studies • Other Considerations Relat<strong>in</strong>g to Option Grants • Best Practices 2
The Law • American Jobs Creation Act of 2004 created Section 409A of the Internal Revenue Code • IRS Guidance – Notice 2005-1 on December 20, 2004 – Proposed Regulations on September 29, 2005 – Notice 2006-4 on December 28, 2005 – F<strong>in</strong>al Regulations expected this summer to be effective January 1, 2007 3
Page 1: Private Company Stock Options: Dete
Page 5 and 6: The Law • 409A penalizes: - Disco
Page 7 and 8: The Law • Penalty for non-complia
Page 9 and 10: Valuation Methods • To qualify fo
Page 11 and 12: Valuation Methods • Factors to co
Page 13 and 14: Valuation “Quasi” Safe Harbor
Page 15 and 16: Valuation “Quasi” Safe Harbor
Page 17 and 18: Case Study • Emerging technology
Page 19 and 20: Scenario 1 • IPO likely in 2006 o
Page 21 and 22: Scenario 3 • Neither IPO nor sale
Page 23 and 24: Modifications and Extensions • Mo
Page 25 and 26: Modifications and Extensions • Ex
Page 27 and 28: Remedial Measures • Alternative 1
Page 29 and 30: Accounting Considerations • AICPA
Page 31 and 32: GOODWIN PROCTER LLP Boston Exchange

Private Company Stock Options: Determining Fair Market Value in ...

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