Further, the form IDR requires the company to identify information relating to individuals who may have benefited from backdating.Specifically, the form IDR requires the company to provide the names and positions of each individual who exercised stock option grants during the years under examination, including: (i) the date the necessary corporate action was completed for the grant of each stock option; (ii) the effective date (or backdate) of the stock option grant; (iii) the fair market value of the underlying stock on each of the aforementioned dates; (iv) the exercise price for each stock option grant; (v) the exercise date for each stock option grant; (vi) the fair market value of the underlying stock on the exercise dates; and (vii) the income tax deduction claimed for compensation reported on exercised options, including § 162(m) computations.The form IDR set forth in the Directive is designed to allow the IRS to leverage off of backdating investigations and information previously provided by taxpayers to the SEC in connection with backdating issues.
Each of these three issues is identified and discussed briefly in the Directive.
IRS Circular 230 Disclosure: to ensure compliance with requirements imposed by the IRS, we inform you that any U.
ESOs are usually granted at-the-money, i.e., the exercise price of the options is set to equal the market price of the underlying stock on the grant date.
As drafted, the form IDR is unnecessarily broad and could be interpreted to require the disclosure of needless information.
We have found the IRS receptive to amending the request to a more specific set of documentation which addresses the IRS's goals.