IRS RULINGS

• Published in: Journal of Taxation Vol. 137; no. 3; pp. 31 - 34
• Main Author: st, David
• Format: Trade Publication Article
• Language: English
• Published: New York Thomson Reuters (Tax & Accounting) Inc 01.09.2022
• Subjects: Alimony; Audited financial statements; Charities; Compensation; Consent; Federal court decisions; Foreign subsidiaries; Grants; Identification; Tax courts
• ISSN: 0022-4863

Treas. Reg. § 1.482-7(d)(3)(iii)(A) provides the default method for measurement and timing of SBC IDCs as the amount allowable to the controlled participant as a deduction for federal income tax purposes with respect to that stock-based compensation (for example, under section 83(h)) and that such amount is taken into account as an IDC for the taxable year for which the deduction is allowable. Notice 2005-991 extended the elective method to nonvested equity shares or nonvested equity share units within the meaning of FAS 123, "Share-Based Payment," Financial Accounting Standards Board (rev. 2004) (SFAS 123R), provided that those shares or share units: (i) constitute or are issued with respect to publicly traded stock within the meaning of § 1.482-7(d)(2)(iii)(B)(2);and(ii)arenot subject to market conditions or significant post-vesting restrictions within the meaning of SFAS 123R.2. [...]all stock-based compensation that is granted during the term of the CS A and, at date of grant, is directly identified with, or reasonably allocable to, the IDA is included as an IDC. Whether the contribution was a bequest or an inter vivos transfer-a bequest will ordinarily be given more favorable consideration than an inter vivos transfer; whether the contribution was in the form of cash, readily marketable securities, or assets which further the exempt purposes of the organization, such as a gift of a painting to a museum; whether prior to the receipt of the particular contribution, the organization (a) has carried on an actual program of public solicitation and exempt activities and (b) has been able to attract a significant amount of public support; and whether the organization may reasonably be expected to attract a significant amount of public support after the particular contribution since continued reliance on unusual grants may be evidence that the organization cannot reasonably be expected to attract future public support.