Section 83 Safe Harbor Election Clause Samples
The Section 83 Safe Harbor Election clause allows parties, typically in the context of equity compensation, to agree that the fair market value of property (such as restricted stock) for tax purposes will be determined at the time of grant, rather than at vesting. In practice, this means that employees or service providers can elect to be taxed on the value of the shares when they receive them, even if the shares are subject to vesting restrictions. This clause provides certainty and potential tax benefits by locking in the value for tax reporting, thereby helping to avoid higher taxes if the value of the property increases before it vests.
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Section 83 Safe Harbor Election. Each Partner authorizes the General Partner to elect to apply the safe harbor (the “Section 83 Safe Harbor”) set forth in proposed Regulations Section 1.83-3(l) and proposed IRS Revenue Procedure published in Notice 2005-43 (together, the “Proposed Section 83 Safe Harbor Regulation”) (under which the fair market value of a Partnership Interest that is transferred in connection with the performance of services is treated as being equal to the liquidation value of the interest), or in similar Regulations or guidance, if such Proposed Section 83 Safe Harbor Regulation or similar Regulations are promulgated as final or temporary Regulations. If the General Partner determines that the Partnership should make such election, the General Partner is hereby authorized to amend this Agreement without the Consent of any other Partner to provide that (i) the Partnership is authorized and directed to elect the Section 83 Safe Harbor, (ii) the Partnership and each of its Partners (including any Person to whom a Partnership Interest, including an LTIP Unit, is issued in connection with the performance of services) will comply with all requirements of the Section 83 Safe Harbor with respect to all Partnership Interests Transferred in connection with the performance of services while such election remains in effect and (iii) the Partnership and each of its Partners will take all actions necessary, including providing the Partnership with any required information, to permit the Partnership to comply with the requirements set forth or referred to in the applicable Regulations for such election to be effective until such time (if any) as the General Partner determines, in its sole discretion, that the Partnership should terminate such election. The General Partner is further authorized to amend this Agreement to modify Article 6 to the extent the General Partner determines in its discretion that such modification is necessary or desirable as a result of the issuance of any applicable law, Regulations, notice or ruling relating to the tax treatment of the transfer of a Partnership Interests in connection with the performance of services. Notwithstanding anything to the contrary in this Agreement, each Partner expressly confirms that it will be legally bound by any such amendment.
Section 83 Safe Harbor Election. By executing this Agreement, each Member authorizes and directs the Company to elect to have the “Safe Harbor” described in the proposed Revenue Procedure set forth in Internal Revenue Service Notice 2005-43 (the “IRS Notice”), including any similar safe harbor in any finalized Revenue Procedure, Revenue Ruling or Treasury Regulation, apply to any interest in the Company transferred to a service provider by the Company on or after the effective date of such final pronouncement in connection with services provided to the Company. For purposes of making such Safe Harbor election, the Tax Matters Member is hereby designated as the “partner who has responsibility for Federal income tax reporting” by the Company and, accordingly, execution of such Safe Harbor election by the Tax Matters Member constitutes execution of a “Safe Harbor Election” in accordance with the IRS Notice or any similar provision of any final pronouncement. The Company and each Member hereby agree to comply with all requirements of any such Safe Harbor, including any requirement that a Member prepare and file all Federal income tax returns reporting the income tax effects of each Interest issued by the Company in connection with services in a manner consistent with the requirements of the IRS Notice or other final pronouncement. A Member’s obligations to comply with the requirements of this Section shall survive such Member’s ceasing to be a member of the Company and the termination, dissolution, liquidation and winding up of the Company.
Section 83 Safe Harbor Election. By executing this Agreement or a counterpart hereof, each Member (a) expressly authorizes and directs the Manager and the Company to take any and all action which is reasonably necessary under applicable federal income tax law (as such law may be revised from time to time) to cause the “liquidation value” methodology to apply to the valuation for federal income tax purposes of any interests in the Company transferred in connection with the performance of services (including, without limitation, the election by the Manager and/or the Company of the “safe harbor” valuation method embodied in Proposed Regulation Section 1.83-3(l)), (b) expressly agrees to comply with all applicable requirements associated with causing such “liquidation value” methodology to apply to any such Membership Units, and (c) acknowledges and agrees that the provisions of this Section 11.19 are legally binding on such party, and that such provisions will survive such party ceasing to be a Member of the Company and/or the termination of the Company, and, for purposes of this Section 11.19 the Company shall be treated as continuing in existence.