Comments Concerning IRS Notice 2001–10
I. Characterizing Equity SDAs
- Transition Issues
- Application of Clearly Inconsistent Standard
We suggest that the "clearly inconsistent" standard for reporting compensation be limited to abusive situations. Paragraph A.1(i) of the Interim Guidance provides that the IRS can disregard any characterization of an Equity SDA which is "clearly inconsistent" with its substance. It appears to us that adopting the presumptive standard as described in Section 1.B.2 above addresses most of the problems contemplated by this provision. In addition, loan treatment or Section 83 treatment should not apply when the employer has no intention of recovering its premium payments. See TAM 200040004 (treating loan proceeds under a promissory note as compensation when coupled with a guaranteed bonus equal to the loan repayment amount).