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Profit Incentive Units (PIU) Sales

Rose S
Level 3


Working on a tax return that has PIU sale proceeds. The PIU's were granted in 2019 under a company buy out plan. The Client has filed the form 83(b) with IRS in 2019 .I was wondering how to record this on the tax return and how to calculate the basis for this Sale.


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3 Comments 3
Level 15

"Profit incentive units" is not a recognized term for equity compensation.  You'll need to confirm the structure of this "PIU" to determine how and when it should be reported.  There could also be §409A implications.

If these are really restricted stick units (RSU), §83(b) should not be applicable at all.

Generally, the C&B and Finance teams of the employer would have already taken advice on financial reporting vs corporate tax treatment as well as compensation reporting from tax and accounting processionals when these plans are structured.

Still an AllStar
Level 15

First see what income from these was  reported on the 2019 tax return. As @itonewbie said, the employer should have provided reams of info to the client about this.

Rose S
Level 3

Thank you!

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