Founder Equity, Stock Options, and the 409A Valuation

Granting stock options without a defensible 409A valuation can expose employees to significant tax consequences. This guide explains how IRC Section 409A applies to founder equity and employee stock options, how fair market value determines option strike prices, when to obtain or refresh a 409A valuation, the three IRS safe harbor methods, and how 83(b) elections fit into the broader equity compensation framework.