In order to work out how an award of securities should be taxed there are two essential elements that need to be considered:
•The status of the securities themselves – are the securities convertible into other securities? Are there any restrictions on the rights of the securities?
•The terms of the offer of securities to the employee – does the employee have to pay anything to acquire the securities? Will the employee have to pay something for the securities now or in the future? Does the employee receive the securities now, or in the future? Do the terms of the offer to the employee impose additional restrictions on his or her rights to enjoy the securities?