June 25, 2022

Volume XII, Number 176

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June 24, 2022

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June 23, 2022

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IRS Releases Guidance on Treatment of Incentive Stock Options in Reorganizations

On May 8, 2015, the Office of Chief Counsel of the Internal Revenue Service released Chief Counsel Advice Memorandum No. 201519031 (available here) describing the difference in tax consequences of a disposition of shares acquired upon exercise of an incentive stock option in a merger that constitutes a reorganization as compared to a merger that does not constitute a reorganization. The IRS Office of Chief Counsel generally advised that where the shares are converted into acquirer shares and other consideration during a merger that constitutes a reorganization under Section 368(a), for purposes of gain recognition and holding period requirements, there is no disposition of the shares. However, there is a disposition of the shares where the merger does not constitute a reorganization under Section 368(a) (and neither Section 354 nor Section 356 applies).

© 2022 Proskauer Rose LLP. National Law Review, Volume VI, Number 27
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About this Author

Colleen Hart, Proskauer Rose, Los Angeles, Tax Consequence lawyer, Corporate Governance Attorney
Partner

Colleen Hart is a partner in the Tax Department and a member of the Employee Benefits & Executive Compensation Group.

Colleen advises companies, executives and boards on complex executive compensation matters. She offers a multidisciplinary approach to compensation and benefits issues with a focus on tax planning, securities laws and corporate governance. Matters she handles include the negotiation, structuring and implementation of employment and change-in-control agreements and deferred compensation, equity and incentive compensation plans...

310.284.4519
Legal, Business, Gary Tashjian, Tax Attorney, Proskauer Law Firm
Associate

Gary Tashjian is an associate in the Tax Department, focusing on executive compensation and employee benefits law.

In the executive compensation and employee benefits area, Gary has experience with employment, change in control and separation agreements for executives; annual and long-term equity and cash incentive awards and plans; severance and deferred compensation arrangements; and compliance with Internal Revenue Code Sections 162(m), 280G and 409A. He also advises corporations, directors and officers in connection with SEC reporting...

212-969-3499
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