Paving the way for a net-win for technology companies, Senate
Finance Committee Chairman Orrin Hatch (R-Utah) released a modified
chairman's mark to the Tax Cuts and Jobs Act that brings
treatment of equity and performance-based compensation under the
Senate Bill in substantial conformity with the bill reported by the
House Ways and Means Committee last week. Most importantly, the
modified mark alleviates concerns about accelerated taxation of
options and restricted stock units (RSUs), and enables certain
private company employees to defer taxation on options and RSUs for
up to five years.
Adverse Revisions to Deferred Compensation Rules Stricken
Consistent with the status quo, stock options granted at fair
market value will not be taxed on vesting. Unless a deferral
election is made as described below, any gain received on the
exercise of non-qualified stock options will continue to be taxed
at ordinary income rates. Incentive stock options will continue to
be
