A range of alternatives are available to partnerships and LLCs for providing equity compensation to their employees, including granting profits interests, capital interests, and options to acquire such interests.
Partnership and LLC equity compensation arrangements present executive compensation counsel with complex design, structuring and tax challenges, unlike corporate equity compensation, which is relatively straightforward.
IRS guidance is lacking on a number of important issues, including whether a partner/member can be an employee for tax purposes, how Section 409A applies, and when 83(b) elections should be made.
The panel offers solutions and strategic approaches for structuring equity compensation for partnerships and LLCs and for avoiding common pitfalls that can lead to disastrous tax consequences.
Brian J. O'Connor, Venable LLP
Edward E. Bintz, Arnold & Porter
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