4 ms·
If you set things up properly, as a founder or sometimes as an early employee, you should only pay capital-gains tax (10-15%).
by abstractbill 19y ago
If you set things up properly, as a founder or sometimes as an early employee, you should only pay capital-gains tax (10-15%).
- mkull 19y agoThats interesting... would love to see more details on this, anyone have any useful links?
- abstractbill 19y agoHere's a good one for employees: http://www.payne.org/index.php/Startup_Equity_For_Employees http://www.payne.org/index.php/Startup_Equity_For_Employees Founders should just ensure they make an 83b election within 30 days of purchasing their stock (usually the purchase price for a founder is very close to zero, so this is all just a matter of paperwork).
- jsteele 19y agoAs the first poster said, don't believe everything you read. The media is all about hype and thousandaires don't roll off the page. The details: the acquisition price was $5 Million which was made up of $2 Million Cash and $3 Million Stock. There were 3 founders, Harjeet Taggar, Kulveer Taggar, Patrick Collison. Each founder held 20.89% of the company at the time of sale. YCombinator held 4.38%. Paul Graham personally held 0.96%. 20.89% of $5 Million is $1,044,500. Of course they only have 40% of that in cash and the other 60% is in stock. The stock was $2.69 the day the deal closed. It's now trading at $2.40. If they still have their shares, they are worth 10% less which is a loss of $62,670. That is all before tax. Factor in capital gains tax of 10-15% before the stock drop and you are already out of millionaire territory. On an unrelated note, each of the founders are now making a base salary $100,000 at Communicate.com. This does not include bonuses, options, etc. Source: http://www.edgar-online.com/bin/cobrand/?doc=A-1108630-0001176256-08-000345&nav=1&src=Yahoo http://www.edgar-online.com/bin/cobrand/?doc=A-1108630-00011...