The AICPA guide behind most 409A valuations is not a rule

The record

Most 409A valuation practice for founder and employee stock rests on a technical guide the AICPA itself publishes: the Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. The AICPA's own product page describes it as developed by AICPA staff and the Equity Securities Task Force, first released in this form in 2013, catalogued as product AAGSTK13E. A companion resources article dated 22 December 2013 confirms the Task Force authorship and states the guide covers accounting for, valuation of, and disclosures related to, such securities. This description reflects both pages as retrieved on 16 September 2026.

What the sources establish

The AICPA's own description states the guide was written because valuing stock-based compensation, what practitioners call cheap stock, became a significant challenge for private companies after FASB issued ASC 718 and 505-50 in 2004, and it says the guide incorporates guidance from ASC 718, 505-50, 820-10 and the AICPA's own valuation standards, SSVS 1, that postdate the last AICPA guidance on the topic. Both pages state the guide is currently being revised, with a working draft of the update posted separately, which means the version described here is not the AICPA's final word on the subject. Neither page describes the guide as an IRS regulation; it is professional guidance the IRS's own safe harbor rules reference only indirectly, by rewarding a qualified, written valuation rather than naming this guide.

Scope and revision

The guide's stated key topics include evaluating private and secondary transactions against a company's own value estimate, adjustments for control and lack of marketability, and incorporating debt into the valuation of highly leveraged companies' equity. It addresses the compensation side of privately held equity valuation specifically, for preparers, auditors and valuation specialists, and the AICPA distinguishes it from a separate guide on fund-level portfolio company valuation covering venture and private equity funds' own holdings, a different task force's product covered elsewhere in this pack. Because the guide is under revision, a valuation performed by reference to it today may cite methodology the update later changes.

The decision in front of you

This is editorial: when a company or its valuation firm cites this AICPA guide to support a stock option strike price, that citation names a professional practice standard, not a legal safe harbor in itself; the actual tax protection comes from meeting the Treasury regulation's own conditions, which this guide is written to help a qualified valuer satisfy.

• Does the valuation report cite this guide's methodology, and does it also identify which Treasury safe harbor it is intended to satisfy?
• Given the guide is under revision, does the valuation reflect the edition current at the time of the grant?
• Are the control and marketability adjustments the guide discusses documented with the company's own facts, not a generic assumption?

A guide developed by a professional body's task force carries authority within the valuation profession, but it is the statute and regulation behind it, not the guide itself, that determines a taxpayer's actual exposure.