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About us

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Avv. Flavia Betti Tonini, PhD, Of Counsel Flavia Betti Tonini is an experienced attorney with a solid background in corporate law, compliance, criminal law, and...

Posted on 13th January 2023 by lcmm@melchionnalaw.com

About us

Mission and Values

Mission Melchionna PLLC is an indipendent law firm. Melchionna PLLC’s mission is to provide outstanding legal services and tax advice. We focus on building a relationship with...

Posted on 5th November 2019 by lcmm@melchionnalaw.com

About us

Melchionna PLLC, a law firm with a focus on business, corporate, tax, and IP law.

About us Melchionna PLLC represents and assists North American and European business clients in achieving their goals with sound legal advice and innovative solutions to current...

Posted on 18th February 2019 by lcmm@melchionnalaw.com

M&A and corporate law

Section 83(b) Election

Restricted stocks conferred to employees, that is stocks that employees can transfer after vesting, are subject to certain tax rules that distinguish them from granted or fully...

Posted on 11th February 2019 by iulia@plus972group.com

International tax

Collecting Sales Tax For Long Distance Sales of Artwork is Mandatory

In South Dakota v. Wayfair et al., (585 U.S. ___, 2018) the Supreme Court of the United State has overturned a precedent previously established in Qill Corp. V. North Dakota...

Posted on 11th February 2019 by iulia@plus972group.com

International tax

Corporate Reorganization for Tax Purposes: The US Tax Court Has Reclassified the Payment of Consulting Fees as a Distribution of Dividends to Shareholders

In Pacific Management Group et al. v. Commissioner (T.C. Memo 2018-131), the Tax Court has established that a reorganization with the intent of postponing tax payments on a flow...

Posted on 11th February 2019 by iulia@plus972group.com

M&A and corporate law

The State of the American Economy– The M&A Market is Taking Off for Small to Medium Sized Businesses

The most recently published data from the Bureau of Economic Analysis (BEA) prove the strength of the American economy, with a GDP that shows a growth of 3.2% in the third...

Posted on 11th February 2019 by iulia@plus972group.com

M&A and corporate law

FIRRMA, Foreign Investment Risk Review Modernization Act: Investing in the USA Will Become More Difficult in Key Sectors

The National Defense Authorization Act, introduced for the 2019 fiscal year, has updated and broadened the powers of the Commission on Foreign Investments in the United States...

Posted on 11th February 2019 by iulia@plus972group.com

Food law

FDA – Drug Supply Chain Security

The FDA has recently finalized some regulations regarding the Drug Supply Chain Security Act (DSCSA). The goal is to help companies that operate in the pharmaceutical industry...

Posted on 11th February 2019 by iulia@plus972group.com

International tax

Tax Cuts and Jobs Act 2017

The Tax Cuts and Jobs Act (TCJA), aimed at reducing the US’s federal tax burdens, came into effect on January 1, 2018. The most important aspects of the TCJA concern the reduction...

Posted on 11th February 2019 by iulia@plus972group.com

M&A and corporate law

Arbitration Clauses in Labor Contracts: Renouncing Class Actions is Legitimate

On May 21, 2018 The Supreme Court of the United States established a relevant principle in terms of hourly compensation in labor contracts and alternative conflict resolution in...

Posted on 11th February 2019 by iulia@plus972group.com

Food law

The Food Safety Modernization Act, FSMA

The FSMA gives the Food and Drug Administration (“FDA”) authority to regulate food grown, harvested, or processed in the US or elsewhere. The FDA has the duty to better protect...

Posted on 12th January 2019 by iulia@plus972group.com

M&A and corporate law

Quadro Economico USA – il mercato delle M&A e’ in ripresa per le aziende medio piccole

I dati piu’ recenti pubblicati dal Bureau of Economic Analysis (BEA) registrano la solidità del quadro economico degli Stati Uniti, con un PIL che evidenzia, nel terzo trimestre...

Posted on 15th December 2018 by iulia@plus972group.com

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M&A and corporate law

Section 83(b) Election


iulia@plus972group.com
Section 83(b) Election
Posted on 11th February 2019 by iulia@plus972group.com

Restricted stocks conferred to employees, that is stocks that employees can transfer after vesting, are subject to certain tax rules that distinguish them from granted or fully vested stocks. The shareholder can, in fact, choose to either subject his or her shares to taxation at the time of vesting or at the time the shares are granted to him/her.

Under Section 83(b) election, the owner of granted, not vested, shares can elect to be taxed at his/her ordinary income within 30 days of granting.

The advantage of the election is that it benefits from the differential between ordinary income taxation and capital gains taxation. The ordinary income taxation (recently adjusted in the 2018 tax cuts) stands at 37% at their highest rate. On the other hand, the long-term capital gains tax ranges from a minimum of zero to a maximum of 20%, depending on the applicable tax rate.

If the shareholder of restricted stock chooses the 83(b) election, the taxation structure will be as follows: (1) upon granting, based on the value of the stock (at the ordinary rate), and (2) upon transfer (at the marginal capital gain rate). Without the election, the taxation will take place at vesting. As a result, if the value of the shares upon granting is nominal, the election will show its advantages.

Given the scenario, employers may want to alternatively consider granting stock options.

The information provided here does not, and is not intended to, constitute legal advice but simply information for general purposes only and may not be the most up to date. Use of our website or any of its links or resources do not create an attorney-client relationship between the reader, user, or browser and the law firm. The views expressed at, or through, this site are those of the individual authors writing in their individual capacities only.

iulia@plus972group.com
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