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Stock Comp Excess Tax Benefit or Shortfall Calculator (ASU 2016-09)

What does this come to under the current IRS rules?

Tax deduction against book compensation for vested RSUs or exercised options, and the windfall or shortfall in tax expense.

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Your figures
Example figuresIllustrative only. Type over them with your own.
Excess tax benefit (shortfall as negative)
$23,750
Windfall or shortfall at settlement
Deferred tax asset reversed (book compensation x rate)
$45,000
Current tax benefit from the deduction
$68,750
Drawn to one scale
Excess tax benefit (shortfall as negative)$23,750
Deferred tax asset reversed (book compensation x rate)$45,000
Current tax benefit from the deduction$68,750
Effect on income tax expense-$23,750
All results
MeasureResult
Excess tax benefit (shortfall as negative)
Reduces income tax expense
$23,750
Deferred tax asset reversed (book compensation x rate)$45,000
Current tax benefit from the deduction$68,750
Effect on income tax expense
Negative: benefit
-$23,750
How this was worked out
Work shownrecomputed as you type
Deferred tax asset = shares x grant-date fair value x rate
Tax benefit = shares x deduction per share x rate
Excess (shortfall) = tax benefit - deferred tax asset

Illustrative arithmetic on the figures you enter. Check the result against your firm's methodology before relying on it.

The formulas

  • Deferred tax asset = shares x grant-date fair value x rate
  • Tax benefit = shares x deduction per share x rate
  • Excess (shortfall) = tax benefit - deferred tax asset

How it works

ASU 2016-09 requires all excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in the income statement, as discrete items in the period the awards vest or settle. Before that update, excess benefits went to additional paid-in capital.

ASU 2016-09 also moved excess tax benefits to operating activities in the cash flow statement.

Illustrative figures only. Check the result against your firm's methodology before relying on it.

Common questions

Are ISOs included?

Incentive stock options give the employer no deduction unless there is a disqualifying disposition, so no deferred tax asset is recorded on them. A disqualifying disposition is recognized when it occurs.

Is the windfall part of the estimated annual effective rate?

No. It is a discrete item in the interim period in which it occurs.

What about awards that expire unexercised?

The deferred tax asset is reversed with no deduction: the full amount is a shortfall.

Sources

Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.

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