Home

Quick Links

Legal

navigation
Home > Services > Consulting > CFO Advisory > Business Valuations > 409A Valuations > Why is an IRC 409A valuation important?

Why is an IRC 409A valuation important?

Why is an IRC 409A valuation important?


Under IRC Section 409A, first released in 2004, privately owned companies such as those in Silicon Valley are required to establish that stock options are being issued at no less than fair market value at the time granted in order to avoid a potentially painful tax liability for the grantee and company. Companies either considering or currently issuing stock options, restricted stock, or any other form of equity compensation should consider an independent IRC 409A valuation annually and more frequently if there is a change in the business which could result in a change of the implied market value of the common stock.