On June 10, the IRS issued a revenue ruling confirming that
a nonstatutory stock option or stock-settled stock appreciation
right (SSAR) that is exempt from Section 409A is also exempt from
Section 457A.
As most readers will know, Section 457A is a special regime for
certain "tax-indifferent" entities (entities such as
corporations located in offshore tax havens or domestic
partnerships substantially owned
by tax-exempt organizations) that generally subjects such
entities' nonqualified deferred compensation
arrangements to tax on vesting, rather than on payment as
under Section 409A.
Previously, despite guidance in Notice 2009-8 exempting 409A-exempt stock
options and SSARs from Section 457A, the IRS's position had
been in some doubt, given language in Section 457A that exempts
409A-exempt stock rights other than any
"right to compensation based on the appreciation in value of a
specified number of equity units of the service recipient." It
wasn't entirely clear
