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Full-Text Articles in Law
Reconsidering Realization-Based Accounting For Equity Compensation, David I. Walker
Reconsidering Realization-Based Accounting For Equity Compensation, David I. Walker
Faculty Scholarship
The U.S. equity compensation landscape continues to evolve. Recent innovations have improved the linkage between pay and firm-specific performance, but have added complexity. Against that backdrop, this Article urges reconsideration of the accounting rules for equity pay. Under current rules, most equity pay awards are expensed based on grant date valuation with no updating for changes in value post grant. This Article advocates the adoption of a mark-to-market or realization-based approach under which the expense recorded for all equity pay awards would ultimately be trued to the value received by employees. Increasingly, equity pay awards are more analogous to commissions …
The Target Method For Partnership Special Allocations And Why It Should Be Safe-Harbored, Daniel S. Goldberg
The Target Method For Partnership Special Allocations And Why It Should Be Safe-Harbored, Daniel S. Goldberg
Faculty Scholarship
The Treasury Regulations’ concept of “substantial economic effect” is the holy grail of partnership special allocations. Special allocations that have substantial economic effect will come within a safe harbor in the regulations and have assurance that the allocations that are provided in the partnership agreement will be respected. In order for the allocations to come within the substantial economic effect safe harbor, the partnership must (1) maintain capital accounts in accordance with the Treasury Regulations’ standard; (2) provide for liquidation in accordance with capital accounts in all events; and (3) either (a) provide for a deficit restoration obligation (DRO) on …