In today’s blog I’m going to deviate a bit from our normal format and invite you to take a little quiz. Don’t worry, nobody’s keeping score except for you, so this is just for fun. Why a quiz, you ask? Have you ever wondered where to find something in the massive IRS Tax Code? Many of us have memorized the names and basics about various tax code sections that apply to stock compensation (e.g. Sections 421, 422, 423, 424, 83, 162 and so on). Or, you’ve heard of some pending regulations, but aren’t really sure whether there’s a pending regulation that covers your area of interest? I personally found it fairly straightforward to memorize the basics about all the major tax code sections, but what I find more challenging is keeping on top of all the subsequent revenue rulings and other guidance that emerges from the IRS. If you’re having the same challenge, you’ll want to be sure to visit our new Tax Code portal. It’s simple and concise – there’s a list and description of the various tax code sections, as well as related rulings and other interpretive guidance that apply to stock compensation. Call it a tax code crib sheet, if you may. Wait! Before you check it out, pause for a moment, in that spirit, to take the Tax Code Challenge!

Tax Code Challenge:

1. Where would you find information about the procedures to revoke an 83(b) election?

a. In Code Section 83(b)(2)

b. The IRS had not provided guidance on any specific procedures

c. Section 83 of the Code is clear that an 83(b) election may never be revoked for any reason

d. In Revenue Proc. 2006-31, which became effective June 13, 2006

2. Which revenue ruling provides guidance on the treatment of dividends and dividend equivalents on restricted stock and restricted stock units for 162(m) purposes?

a. There is no revenue ruling that covers dividends/dividend equivalents

b. Revenue Rul. 2012-19

c. Revenue Rul. 98-34

d. There is no revenue ruling, but there are proposed regulations pending on this topic

3. Which of the following reflect pending regulations?

a. Rules relating to the additional medicare tax

b. Rules related to valuing employee stock options that have been gifted for estate planning purposes

c. Rules regarding new information disclosures for Section 6039 related information returns

d. There are no pending revenue rulings that would affect stock compensation

The answers are listed below. If you knew all of the answers – great! You’re a tax guru. For the rest of us that may have been stumped by one or more questions, a visit to the Tax Code portal may help gain clarity in this area.

-Jennifer

Quiz Answers: (1) d (2) b (3) a