What is 409A Valuation?
409A Valuation
A 409A Valuation is an independent appraisal of a private startup's common stock value, required by IRS Section 409A to set tax-compliant option strike prices.
Why It Matters for Startups
Directly dictates the cap table and dilution structure during fundraising; understanding 409A Valuation helps founders model equity distributions when structuring rounds for irs tax code compliance audits.
Detailed Deep Dive
A 409A Valuation is an independent appraisal of a private startup's common stock value, required by IRS Section 409A to set tax-compliant option strike prices.
Frequently Asked Questions
Q:How often must a startup get a 409A valuation?
Every 12 months, or immediately following any event that materially affects the company's value (like a funding round).
Q:What happens if a startup sets option prices without a 409A?
Employees can face massive tax penalties, interest charges, and audit fines on their option grants.
Quick Facts
- CategoryFunding
- Key ApplicationIRS tax code compliance audits
Coverage Trend12 Weeks
Related Startup Terms
Cite This Term
Reference this definition in your articles, research, or documentation to credit this source:
409A Valuation Media Coverage & Intelligence
No Direct 409A Valuation News Today
We currently have no direct coverage articles matching "409A Valuation". Explore trending global startup topics below instead.
Trending Startup Stories
Introducing Claude Sonnet 5.5 on AWS
Claude Sonnet 5.5 is now available on Amazon Bedrock and Claude Platform on AWS. It's a smarter, more efficient Sonnet model for focused coding and knowledge...
Grok 4.7 is now available on Amazon Bedrock
xAI's Grok 4.7 is now available on Amazon Bedrock: a frontier model for coding, long-running agents, and knowledge work. It offers a 500K token context...
Prompt engineering fundamentals for Amazon Quick
Prompt engineering in Amazon Quick shapes how accurately its AI-powered feature respond to your requests. Part 1 of a two-part series covers the...
Prompt engineering by Quick component: Patterns and pitfalls
Part 2 of our Amazon Quick prompt engineering series goes component by component. Learn the prompt patterns that get the best results from Amazon Quick...