Perspectives

IRS Issues Revenue Ruling 2014-18

Application of Section 457A to certain equity arrangements

The Internal Revenue Service ("IRS") released Revenue Ruling 2014-18, which provides guidance as to whether nonqualified stock options ("NSOs") or stock-settled stock appreciation rights ("SARs") are nonqualified deferred compensation subject to section 457A.

Revenue Ruling 2014-18 is consistent with our prior understanding of the exception for NSOs and SARs (discussed in the full alert), and confirms that NSOs and stock-settled SARs that satisfy certain equity exceptions under section 409A that are issued by an entity subject to section 457A to an unrelated non-individual service provider are not subject to taxation under section 457A.
 
This alert provides an overview of the Revenue Ruling and background.  

Contact Information
 

Ted Dougherty
National Managing Partner
Investment Management Tax
Deloitte Tax LLP
+1 212 436 2165 [Call: +1 212 436 2165]
edwdougherty@deloitte.com
    
Elizabeth Drigotas
Principal
Deloitte Tax LLP
+1 202 879 4985 [Call: +1 202 879 4985]
edrigotas@deloitte.com

Read the full report.
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