Perspective
May 4, 2013
Trouble ahead for discounted stock options
In a recent case the Federal Claims Court held that discounted stock options constitute a deferral of compensation and, hence, are subject to Section 409A. By Edward A. Frueh
In what might be the opening salvo in a campaign to reap penalty taxes from discounted stock options (that is, those granted with an exercise price below fair market value on the date of grant), the Internal Revenue Service has successfully argued that Section 409A of the Internal Revenue Code applies to such options. Specifically, in Sutardja v. United States, No. 11-724T (Fed. Cl. Feb. 27, 2013), the Federal Claims Court, agreeing with...
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