Intrinsic provides companies a valued partner to fulfill the requirements of IRC Section 409A of the Internal Revenue Code and ASC 718 / SFAS 123R regarding the valuation of stock options and other forms of deferred compensation. Our 409A valuations are designed to quickly be approved by auditors, have been reviewed by the “Big 4” accounting firms and other national and regional accounting firms, and are compliant with industry guidance.
Violation of Section 409A causes employees and other plan participants to immediately recognize income tax on deferred amounts + a penalty tax of up to 20.0 percent + state penalties + IRS tax underpayment penalty + any interest on unpaid taxes. While most startups and lower middle market companies are unlikely to face an audit, company success can cause the SEC and IRS to take a closer look.
The IRC regulations contain “safe harbor” protections, including the use of an independent appraisal, which can shift the burden of proof from the employer and employees to the IRS. Intrinsic brings institutional knowledge at a competitive price, all while providing a conflict free valuation. We are experts at working with emerging technologies and early stage companies, our goal is to dig deeper for cheaper and to build reports optimized to get through a potential audit.
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