SYMC » Topics » Federal Income Tax Information

This excerpt taken from the SYMC DEF 14A filed Jul 28, 2008.
Federal Income Tax Information
 
The following is only a summary of the effect of U.S. federal income taxation on participants and Symantec with respect to the grant of awards under the SEIP. It does not purport to be complete and does not discuss the tax consequences arising in the context of the participant’s death or the income tax laws of any municipality, state or foreign country in which the participant’s income or gain may be taxable.
 
Cash awards granted under the SEIP will cause the participant to have taxable ordinary income, in the year of receipt, equal to the cash received. Any cash received will be subject to tax withholding by Symantec.
 
The American Jobs Creation Act of 2004 added Section 409A to the tax code, generally effective January 1, 2005. The IRS has issued proposed and final regulations that, in part, give employers until the end of 2008 to effect written Section 409A implementation in almost all circumstances. Section 409A covers most programs that defer


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the receipt of compensation to a year following the year in which the recipient first had a vested right to the compensation. It provides rules for elections to defer (if any) and for timing of payouts. There are significant penalties placed on the individual employee for failure to comply with Section 409A. While Section 409A may affect the timing of our withholding obligations, it does not affect our ability to deduct deferred compensation. We operate the SEIP in a manner that exempts it from application of Section 409A, although the SEIP allows us to offer deferral programs to participants with respect to their plan awards. To the extent we adopt such deferral programs from time to time, we would intend to operate them so that the additional taxes and other penalties provided for under Section 409A would not apply to amounts paid under the SEIP.
 
As discussed above, our purpose in seeking stockholder approval with respect to the SEIP under this Proposal No. 4 is to qualify future SEIP awards as performance-based compensation under Section 162(m) so that we may fully deduct amounts paid under these awards.
 
THE BOARD RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL NO. 4


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Federal Income Tax Information
 
THE FOLLOWING IS A GENERAL SUMMARY AS OF THE DATE OF THIS PROXY STATEMENT OF THE U.S. FEDERAL INCOME TAX CONSEQUENCES TO DIRECTORS ASSOCIATED WITH STOCK ISSUED UNDER THE DIRECTOR PLAN.
 
A director will recognize taxable income at the time Stock is issued under the Director Plan equal to the fair market value of the Stock issued to the director. This amount must be treated as ordinary income and may be subject to income tax withholding by Symantec. Upon resale of the shares by a director, any subsequent appreciation or depreciation in the value of the Stock will be treated as long-term or short-term capital gain or loss.
 
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