Brad Feld

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Is 409A Too Difficult For The IRS To Figure Out?

Jun 07, 2006

Just when you thought you’d never hear from me and Jason on 409A again, we received the following missive from a lawyer friend of ours:

(The) IRS is now saying that drafting final regs is too hard and that they won’t be out until late summer/early fall.  That translates into September/October in my head. Apparently they’re having issues with putting together startup valuation rules.

Well, at least we don’t feel so stupid now thinking that complying with 409A is an almost impossible task.  As previously stated in our 409A series, the idea of coming up with any “real” private company valuation is, at best, a shot in the dark.  Nice to see the IRS struggling with a monster of its own making. 

We can’t wait to see what guidance they come out with.