Tax Accounting

Our settlement processes are completed at the tranche level so that the appropriate expense is allocated for grants with variable accounting or modifications. For all pre-adoption (FAS 123R) grants, the settlement reports include APIC pool calculations that are consistent with the Client’s method of accounting the pool of excess tax benefits on the adoption date. For settlements of replacement grants, we include the unsettled deferred tax assets (DTA) from the applicable exchanged grants. For temporary and permanent DTA adjustments (for IRC § 162(m), lobbying, etc.), we provide separate reports so that ensuing impact calculations are easier.

Every period, Financial Intelligence provides a detailed DTA roll-forward for each grant. DTA is automatically adjusted (mark-to-market) due to employee mobility and tax rate changes. The DTA roll-forward is reconciled to period expense and settlements and it acts as subsidiary detail for the equity compensation deferred tax assets carried on the balance sheet.

We provide our clients with customized reports to ensure consistency and accuracy in their tax accounting.