QUALIFIED EQUITY GRANTS UNDER §83(i): OPTIONS & RSUs
01.Core Concepts
• The TCJA introduced an opportunity for private companies to issue options and restricted stock units (RSU) and for qualified employees to defer the tax into the future for up to five years, if an election is made within 30 days of the earlier of vesting or when the options or RSUs are transferable. • The stock must be “qualified stock” from an “eligible corporation,” which is not publicly traded, and the company has a written plan under which “80%” of U.S. employees are granted stock options or RSUs. • Deferral would last until the earlier of the following dates: • Stock is transferable back to the employer • The employee becomes an excluded employee • Stock is tradable on an established securities market • Five years after vesting • Upon the employee revoking the election • Only applies to qualified employees