Tax & Compliance

A bouquet of services for all privately held companies that require an independent valuation for option grants and tax purposes.

IRC 409A


Your client is a fledgling, bootstrapped startup burning cash to transform an innovative idea to reality and in this pursuit requires a talented pool of human resources, but is constrained to dole out all cash. For such innovative startups, stock options or deferred compensation play a very significant role in attracting right talent and retaining them. While most companies have stock options as an integral part of their employee compensation structure, they do not appreciate the importance of right valuation of stock options and conformance to the regulations of the revenue (IRS). Under valuation of stock options leads to undue favor to current employees at the cost of future employees and investors. Whereas over valuation leads to loss to current employees and revenue department. Hence, it is of utmost importance that valuation of deferred compensation is performed by a competent, independent professional appraiser having expertise in private company valuations and understands the nuances IRC 409A.

At Knowcraft, we provide end-to-end 409A valuation services of the highest quality to some of the leading valuation advisory firms in the US. Our team of seasoned valuation professionals is geared to help you maintain your quality of services while providing scalability, and all these at a very cost-effective offshore pricing model. Our strong internal processes and controls ensure that our 409A valuations are robust, defensible to the auditors and IRS, as well as very fair and transparent to clients’ employees. All these factors together ensure that your clients sail through their future tasks, be it expensing, audits, M&A or even an IPO.

Employee Stock Options


Whether for tax compliance, financial reporting, or purely from an employee incentive standpoint, ESOPs play a key role in the continued growth of the client by enabling high employee retention in the long term. Over the years, ESOP plans have evolved to become increasingly complex in nature, so as to be safely compliant with all the laws, as well as to tie in with other reported financials of companies. This continued evolution of ESOP agreements has warranted valuation experts to be on their toes and remain constantly updated with the industry best practices to meet newer challenges.

Knowcraft provides comprehensive ESOP-related services, including initial fairness opinion, deal structuring, annual plan revisions, expensing advice, option redemption and cancellations, as well as responding to assessment queries by the auditors, IRS and Department of Labor (DOL).

Gift & Estate Tax


A business, an asset or an estate has the potential to ‘live on’ forever, but not its owner. Therefore, the business owner must establish an effective succession plan well in advance. Any estate valued over $5.45 million left intestate is subject to federal estate tax of up to 40% unless its ‘gifting’ to the legal heirs is properly planned for. One of the key elements of successful estate planning is the minimization of estate tax through a proper valuation of estate assets.

Our valuation experts consider all the relevant factors, such as timing of gifting, control and marketability discounts, multiple ownership structures and right business valuation methodologies to provide your clients with an insightful estate valuation report.

S-Corp Election


A C-Corp entity elects to convert into an S-Corp primarily for two key taxation considerations:


In effect, an S-Corp is a much more tax effective business vehicle.

However, the timing of election to move from a C-Corp structure to an S-Corp is a key decision to be made by business owners because in case the converted entity were to sell whole or any part of it, business with the sold part having embedded value creation from the preceding 10 years post conversion, your client will be liable to pay tax on such embedded value!

It is very evident how complex and tricky this S-Corp election can prove to be for your clients. One wrong move can lead to a disastrous tax assessment while that one right move can enable them to save massive amounts of taxes in the long term. The key decision to make is to choose the ‘right’ advisors and partners.