Why is FMV required?
Carta requires current and historical Fair Market Values for the company to ensure that equity awards were issued under the safe harbor laws of the IRS, and to prepare tax information for electronic exercises.
The following actions require correct FMV:
Form 3921 for option holders
83(b) election letters for early exercise option grants
AMT Tax for ISO exercises
NSO tax withholdings for employees
RSU tax withholdings
If your company doesn't have a 409A valuation yet, Par Value can be used as Board-determined FMV and corrected at a later date. This allows for exercises in the absence of a 409A valuation.
After onboarding has been completed, request a Carta 409A to work with a valuations analyst.