New IRS Proposed Regs Impact Restricted Stock
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Last week the IRS came out with proposed regulations modifying definition of "substantial risk of forfeiture" which directly applies to restricted stock and performance shares. See latest myStockOptions.com blog for more details: http://bit.ly/KRJnjw
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Bruce,
Thanks for bringing this to the forefront. I had missed the specific example given regarding performance-based vesting. It is troubling that the IRS and Treasury, in any way, feel that they can and should be judging the teeth involved in performance metrics and goals.
While it would seem reasonable that something that obviously will be met should not be considered a restriction, their example of a sales goal could easily be a reasonable goal if the company, it;s market, its product etc.. are forecasted to be going down over the award period.
How the IRS will determine this, without apply 20/20 hindsight, is beyond me.
EVERY public company should closely read your post and the posts it links to. Because nearly every public company has, or will have, performance-based equity by the time this rule is final.