Do companies receive a tax deduction for stock grants?
September 21, 2011
Subject: Employee stock grant
Date: Thu, 16 Oct 2008
I have a client who instead of giving a cash bonus to their employees wants to give them stock awards/grants. I believe the employees would have to report income equal to the value of the stock on the date of the grant, but would the company get a tax deduction equal to that amount?
Also, they want to issue the stock awards out of treasury stock. How would they account for the transactions?
Date: 7 Nov 2008
Yes, the employer gets a tax deduction corresponding to the income reported by the employees. See Internal Revenue Code Section 83 and the related regulations.
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