Tax errors can be costly! Don't draw unwanted attention from the IRS. Our Tax Center explains and illustrates the tax rules for sales of company stock, W-2s, withholding, estimated taxes, AMT, and more.
Pre-IPO
The content in this section explores the tricky world of stock grants in private companies and startups.
Browse an overview of this section below, or explore the subtopics to the left.
Learn key terms and concepts in Basics. Special stock options sometimes used by privately held companies are the subject of Early-Exercise Options. Learn what an IPO may mean for your stock grants in Going Public.
Video included! For private company employees with stock options, RSUs, and shares in the company, an initial public offering (IPO) presents unique planning circumstances. We asked financial advisors for their insights. Read their responses in their own words.
My clients who work at startup companies preparing for an initial public offering (IPO) are giddy with thoughts of the wealth and opportunities their pre-IPO stock compensation will provide. I try to set them straight with five financial-planning points that may help to manage their post-IPO expectations.
The biggest surprise for employees with stock options at pre-IPO companies is often the amount of taxes they need to pay when their company goes public or is acquired. When they exercise their options after the IPO or as part of the acquisition, selling the stock at the same time, a large chunk of their proceeds goes to pay federal and state taxes. This article looks at ways to reduce this tax burden.
Stock grants in privately held companies can be structured in surprisingly diverse ways, many of which are not commonly known. This article looks at stock plan details in the Form S-1 SEC registration statements of IPO companies to explain how stock options and restricted stock grants at private companies may be different and more complex than the standard types of grants used by public companies.
Podcast included! As privately held companies prepare for their market debuts, they make changes in their equity compensation programs beyond just stock options. This article looks at some of the shifts you can expect in your stock grants from the startup stage through the IPO and the post-IPO periods.
Companies grant early-exercise stock options mainly to limit the taxes you will pay at exercise or later at the sale of the stock. However, an exercise of incentive stock options (ISOs) can have negative tax consequences in a disqualifying disposition (e.g. an early sale of ISO stock). This article reviews the tax effects of early-exercise ISOs and compares the tax results to those of early-exercise nonqualified stock options.
This is simply a selection of the many articles in this section. Use the navigation to the left to explore all of the categories in this section.
Different methods can be used. The valuation of options and stock issued by private companies is more art than science. At least in the context of valuations for estate and gift tax purposes, the IRS has admitted...
The core concepts of equity compensation are similar. The tax treatment is also the same, even for shares that are restricted securities, which can present a tax dilemma. The differences include the following...
Stock in private companies lacks liquidity, is not registered with the SEC, and usually has company-imposed contractual resale limits, so resales are difficult and need to follow the requirements of SEC Rule 144. Some private companies allow resales of stock by...
If your employer is a for-profit corporation, it probably can offer stock options, restricted stock, or other types of equity compensation to its employees. There may, however, be many reasons why your employer is not offering stock grants...
Companies have flexibility in setting the conditions on which their stock grants can vest. This type of double-trigger vesting allows your company to base the vesting of your grant on...
This is done mostly by startup and private companies. Early-exercise stock options allow you to exercise when the stock price is low and then start your capital gains holding period. The risk is that...
Early exercise gives employees who can pay the exercise price the opportunity to start their capital gains holding period early. If your plan permits this strategy, it makes sense in certain situations, such as...
A common misunderstanding is that a Section 83(b) election is required for grants in private companies or is available for any grants. A Section 83(b) election is available only when...
This is simply a selection of the many FAQs in this section. Use the navigation to the left to explore all of the categories in this section.
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Tax errors can be costly! Don't draw unwanted attention from the IRS. Our Tax Center explains and illustrates the tax rules for sales of company stock, W-2s, withholding, estimated taxes, AMT, and more.
Basics
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