Backdating tax business cycle dating committee national bureau
On July 11 the IRS released an internal Industry Director Directive memorandum dated June 15, 2007 (the "Directive"), which designates transactions involving backdated stock options as a "Tier I Issue" for IRS agents.Tier I Issues are considered matters of "high strategic importance," The Directive has important implications for both companies and individuals.That’s a legitimate use of a retroactive effective date. One good rule of thumb is this – would you expect the parties to object to signing the signature page if the actual date of execution (which is after the effective date) was adjacent to their signatures? But in the second example, the parties would presumably not want the actual execution date anywhere on the agreement!Contrast that with an agreement dated “effective as of December 31, 2012” when the parties did not reach agreement until January 2013, but used the 2012 date to get last year’s substantially lower long term capital gain rates. For a very good article on this topic from an excellent resource for the M & A lawyer, see Backdating (63 Bus. You should call the Income Tax helpline instead if you receive other income such as dividends or savings.
The Directive also expands the categories of options that trigger special attention to include any options that might be discounted, mis-priced, mis-dated, or in-the-money.To benefit as a couple, you (as the lower earner) must normally have an income below your Personal Allowance - this is usually £12,500.You can calculate how much tax you could save as a couple.The Directive is significant, nonetheless, in that it signals a nationally coordinated effort within the IRS to target transactions involving backdated stock options, and also establishes mandatory audit requirements and centralized reporting procedures within the IRS as relating to backdated stock options.As noted below, the directive also signals the IRS's intention to pursue the issue against individuals who received such options.