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.
“I have retained John several times to provide business valuations for estate and business planning clients. John is knowledgeable and detail-oriented. He keeps me updated throughout the valuation process and always provides a great work product.”
“John is a man of honor, respect and integrity. He goes above and beyond for his clients with honesty and accuracy. I look to John with high regards and much respect.”
“It is a joy to work with John because he does what he says he will do, communicates status with the client & advisory team, follows up as necessary with additional questions, produces a complete, professional product and delivers on time. He knows his business and, for the icing on the cake, he is a great person!”
“John worked extremely well with a client that needed a business appraisal for estate purposes, but was extremely distraught and as such no so motivated. John, with highest quality, compassion and professionalism got the appraisal done. Thank you again, John!”
“John Mack has done excellent business and estate planning appraisal work for me and my clients. He has a CPA and appraiser background, he stays up with current law in this area to comply with IRS requirements, and understands the issues for advanced estate planning.”