ABATax Comment Concerning IRS Notice 2001-10

Section of Taxation
Submission to the Federal Executive Branch

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Comments Concerning IRS Notice 2001–10
April 2001

I.  Characterizing Equity SDAs

  1. Section 83
     
    1. Section 83(b) Elections

      The mechanics for making a Section 83(b) election should also be addressed. Section 83(b) allows an employee to elect immediate taxation on a transfer of property that is subject to a substantial risk of forfeiture. The election must be made not later than thirty days after the "transfer of property." Presumably, Section 83(b) elections will be allowed with respect to an event that the IRS characterizes as a "transfer of property."

      How and when Section 83(b) will apply to Equity SDAs depends, in large part, upon (a) what is considered to be Section 83 "property" (i.e., can there be more than one piece of "property" in a policy), (b) what event or events (i.e., mere increases in CSV or rollout) are considered to result in a "transfer, and (c) what circumstances present a "substantial risk of forfeiture." As discussed above, it is our view that a transfer of property should not occur before rollout for tax policy and practical reasons.

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