Master Rules for Transferring Stock to Employees
This two-hour CPE provides a practical examination of Code Section 83 and important tax ramifications and considerations for employers and employees who transfer and receive stock that may be subject to a substantial risk of forfeiture.
Transferring stock to employees is often a great business move, but making the Code Sec. 83(b) election could turn it into a great tax move as well for both the employee and the employer. Moving income from ordinary income to capital gains for tax treatment is a desirable tax planning goal. When a business transfers stock to an employee as compensation and includes conditions on the transfer, the value of the stock may not be immediately treated as compensation to the employee or deductible by the employer. When the conditions are satisfied, the stock is then income to the employee. A Sec. 83(b) election allows the employee to report compensation income on the value of the stock when received, and then allow a future sale to be treated as a capital gain. The election can be beneficial to both employer and employee. But there are potential pitfalls and recordkeeping and filing hurdles that must be navigated to ensure that the election is successful.
Publication Date: July 2020
Designed For
Accountants, tax attorneys and advisors who work with closely held businesses
Topics Covered
- General Rules of Code Section 83
- What Is a 'Substantial Risk of Forfeiture'?
- Exceptions to Code Section 83
- Final Section 83 Regulations ” 2014
- The Section 83(b) Election
- Section 83 and Partnership Interests Received in Exchange for Services
Learning Objectives
- Identify and apply a solid base of knowledge regarding Code Section 83
- Recognize the substantial risk of forfeiture when transfers of stock are made to employees
- Describe factors that are taken into account regarding transfers of property to a corporate owner-employee and if there is a risk
- Recognize factors considered by the IRS to determine if a transfer has taken place
Level
Intermediate
Instructional Method
Self-Study
NASBA Field of Study
Taxes (2 hours)
Program Prerequisites
Basic understanding of federal income taxes
Advance Preparation
None
Instructor
Steven G. Siegel
Steve Siegel is president of The Siegel Group, a Morristown, New Jersey-based national consulting firm specializing in tax consulting, estate planning and advising family business owners and entrepreneurs. He holds a B.S. from Georgetown University, a J.D. from Harvard Law School, and an LL.M. in Taxation from New York University.
Mr. Siegel is the author of several books, including the Grantor Trust Answer Book published by Wolters Kluwer, and is a nationally-recognized writer and speaker who has lectured extensively throughout the United States on tax, business and estate planning topics. Mr. Siegel has served as an adjunct professor of law at the University of Alabama Law School Graduate Tax Program and at Seton Hall and Rutgers University law schools.