NASPP members frequently ask whether it is permissible to withhold federal income taxes at a rate higher than the flat rates applicable to supplemental payments. This article explains what you need to know about this practice, including the IRS's rules and accounting considerations.
Written for readers without an accounting background, this article provides a summary of the treatment of stock compensation under US GAAP. Also includes highlights of differences between the US GAAP and IFRS with respect to stock compensation.
On March 30, 2016, the FASB issued Accounting Standards Update 2016-09, which finalizes the FASB's updates to simplify the operation of ASC 718, including changes to the accounting treatment of the tax effects of stock compensation, forfeitures, and share withholding.
This article summarizes how ASU 2016-09 amends ASC 718, including changes to tax accounting procedures, application of estimated forfeiture rates, and the treatment of share withholding.
This article provides a handy table that compares the guidance in ASU 2016-09 to prior US GAAP and includes KPMG's observations on the new guidance.
Deloitte's summary of and observations on ASU 2016-09, including an example of the journal entries for the new tax accounting.
A common feature of incentive plans, negative discretion provisions let compensation
committees use subjective criteria to reduce otherwise objectively determined awards, without
violating the performance pay exception to the Code section 162(m) limit on deductible
compensation. These provisions might, however, create unwelcome accounting results if used in
performance-based equity plans. According to some accounting firms, the possibility that a
compensation committee will exercise negative discretion suggests that the FAS 123(R) grant
date does not occur until the committee decides whether to use its discretion – so variable
accounting applies until that time. After introducing the key concepts, this article analyzes the
accounting issues and outlines steps companies may wish to take to avoid adverse accounting.
Paying out options or awards in cash? Here's how to account for the payout, explained in fewer than 75 words.
Final Update to ASC 718
It's Here! FASB Issues Update to ASC 718
Understanding time consuming accounting and legal practices in equity compensation
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