Some comments on the discount valuation of publicly traded stock for federal estate, gift, and income tax purposes

Article Abstract:

Blockage is considered by the IRS to be an acceptable basis for income tax, estate tax and gift tax valuation discounts of stock, but case law places some limits on such discounts. Blockage exists when a block of stock is so substantial that disposition of the block would depress the market for the stock and hence depress the stock's price. Events occurring after the valuation date should not influence valuation, and estate tax alternate valuation may limit the availability of discount valuations. For gift tax purposes, each gift of stock is considered a separate block.

Taxation, Stocks, Transfer taxes, Valuation, Discount (Finance)

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Error: Form 144 - instruction number 2 to table I can be ignored

Article Abstract:

A new version of Form 144 released by the SEC in May 1996 inadvertently included instruction 2 underneath table 1 on the reverse side of the form, and practitioners should erase or white-out this instruction. Following this instruction was made unnecessary when the SEC rescinded Rule 144(d)(3) in 1990. Prior versions of Form 144 released subsequent to the rule change had in fact deleted instruction 2. The SEC is considering restoring the tolling concept that made the instruction necessary, but until that change is made, the instruction should be ignored.

Regulation, Licensing, and Inspection of Miscellaneous Commercial Sectors, Securities & Commodities Regulatn, Disclosure (Securities law), Securities law

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Some comments on the "cashless exercise" of employee stock options - financing through the securities brokerage firm

Article Abstract:

Securities firms now have more latitude in financing the exercise price and withholding taxes for employees by loaning money to employers. Under Federal Reserve Board Regulation T, Section 220.3(e)(4), securities broker-dealers can help customers finance the use of employee stock options in cases which customers previously would not have had adequate collateral. The notice of exercise and accompanying documents are treated as being equal to the stock certificate underlying the option and fulfill the collateral requirement.

Finance, Services, Stockbrokers, Employee stock options

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