Client's consultant early exercised non-quals and then made an 83(b) election on the shares received (which are restricted/not yet vested) upon exercise resulting in an income event for the individual/deduction for the Company. The income event resulted in a shortfall (tax deduction was less than the book compensation that will be recorded). For tax accounting purposes (US GAAP), there is no APIC pool. I'm looking into whether that shortfall amounts gets recorded to the P&L fully in the year of exercise (i.e. the year in which the tax deduction is taken) or if there is some impact in the future years for the shortfall (maybe the shortfall gets recorded ratably over the vesting period, or maybe the shortfall doesn't fully get recorded until at least that amount of book expense is recorded in the P&L, or another method). The related confirmation to round out the accounting is that this will interplay with how much the DTL will be for the future book compensation. If, anyone has seen this scenario, any feedback would be welcome! thanks.
