Section 409A Valuation Services
Establish safe harbor fair market value for stock options and deferred compensation with an independent, IRS-compliant valuation.
What Is a Section 409A Valuation?
Section 409A of the Internal Revenue Code requires companies that grant stock options or other forms of deferred compensation to establish the fair market value (FMV) of their common stock at the time of grant. A qualified, independent 409A valuation provides "safe harbor" protection, meaning the IRS presumes the valuation is reasonable unless it can prove otherwise.
Without a defensible 409A valuation, your company and its employees face severe tax penalties — including a 20% additional tax on deferred compensation and potential interest charges. Our certified appraisers deliver reports that satisfy IRS requirements and protect your business.
Who Needs a 409A Valuation?
- Startups and private companies issuing stock options or equity compensation
- Companies granting restricted stock units (RSUs) or stock appreciation rights (SARs)
- Businesses with deferred compensation arrangements
- Companies approaching a funding round, acquisition, or IPO
- Any organization that needs to update their FMV annually or after a material event
What's Included in Your Report
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Frequently Asked Questions
How often do I need a 409A valuation?
Generally, 409A valuations should be updated at least every 12 months or after a material event such as a new funding round, significant revenue change, or acquisition. This ensures your stock option pricing remains at fair market value and maintains safe harbor protection.
What is safe harbor in the context of 409A?
Safe harbor means the IRS presumes your valuation is reasonable unless it can prove otherwise. To qualify, the valuation must be performed by a qualified independent appraiser and meet the requirements of Section 409A and Treasury Regulation 1.409A-1(b)(5)(iv).
What happens if I don't get a 409A valuation?
Without a defensible 409A valuation, stock options may be considered granted at below fair market value, triggering a 20% additional tax on the option holder, plus potential interest charges. Both the company and employees can face significant financial penalties.
Protect Your Company with a Defensible 409A Valuation
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