Companies often provide stock options to key employees to reward them for their excellent work and incentivize them to stay with the company. Stock options are a common form of incentive compensation that often fall within the scope of Section 409A of the Internal Revenue Code. The Internal Revenue Service (IRS) is concerned that stock options issued “in the money” (or a strike/exercise price below the current fair market value per share of the stock) are really just a form of deferred compensation, representing a shifting of current compensation to a future taxable year. Thus, employers need to demonstrate to the IRS that all stock options are issued with the strike price (aka exercise price) equal to the fair market value of the underlying securities as of the grant date (aka “at the money”). When stock options are issued “at the money”, employees are not receiving anything of value, as if they exercised the option they would be paying the current fair market value for the stock. For public companies, it is easy to determine the fair market value of the underlying stock on the grant date. However, for private companies, the fair market value per shares is not readily available. Thus, in order to satisfy the IRS requirements, the professionals at Mack Business Appraisals are engaged by business owners to independently determine the current fair market value per share so that the strike price can be set at the current fair market value of the stock as determined by the business appraiser.