A belated holiday gift was given to all California option grantees from the California Franchise Tax Board. If you remember from our previous series on 409A, if you screw up, the option holder gets hit with a 20% federal excise tax. Not to be outdone, it appears that California is also tacking on a 20% state excise tax as well.

A friend of ours at a large Silicon Valley law firm indicated that the instructions to the CA tax forms include this new 20% tax, and despite contrary reports last fall from the CA Tax Board, it appears they now intend to get in on the game. Please note that the online forms are different than the hard copies sent out to taxpayers.

Ahwnold? Ms. Pelosi? Please stop the madness.