Private Company Stock Options: Determining Fair Market Value in ...
Private Company Stock Options: Determining Fair Market Value in ...
Private Company Stock Options: Determining Fair Market Value in ...
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The Law<br />
• For example, option granted at $2 when<br />
FMV is $3<br />
• At vest<strong>in</strong>g, FMV is $7<br />
• Under Section 409A, the spread of $5 is<br />
taxed at ord<strong>in</strong>ary <strong>in</strong>come rates (a tax of<br />
$2 at 40% rate) on the vest<strong>in</strong>g date<br />
• Plus an additional 20% tax on the<br />
spread of $5 (or $1)<br />
8
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