Restricted stock in acquisitions: IRS provides much-needed guidance.
The Tax Adviser › Vol. 39 Nbr. 4, April 2008
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Restricted stock in acquisitions: IRS provides much-needed guidance.
It is common for key employee shareholders to retain an interest in the target business following either a taxable or tax-free acquisition. In many cases, the key employees' stock is either converted into or exchanged for stock that vests over time based upon the shareholders' continued employment with the target or the acquirer. Such stock is commonly referred to as "restricted" or "substantially nonvested" stock. The receipt of restricted stock is generally treated as a taxable event under Sec. 83 when the transfer is made in connection with the performance of services.
For many years, the application of Sec. 83 to an employee's conversion or exchange of "fully vested" or "unrestricted" shares for restricted shares ha...See the full content of this document
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