409A
409A is the section of the Internal Revenue Code that regulates the tax treatment of “non-qualified deferred compensation.”
In order to avoid extremely adverse tax consequences, startups comply with Section 409A by issuing stock options at least at fair market value.
About the Author
Ryan Roberts is a startup lawyer and represents technology companies through all phases of the startup process, including incorporation, seed & venture financings, and exit transactions. Click here to learn more about his practice.
