4 ms·

When you join the company needs to be valued less than $50 million (by the article), the price of the actual stock doesn't matter.

by kreetx 7y ago

toomuchtodo 7y ago
Thank you, this is very helpful for me.
jandrese 7y ago
So like Eric Schmidt could use this if he cashed out his Google options?
- zaroth 7y ago
  Probably. But it’s limited to the first $10mm of gains.
  - CalChris 7y ago
    $10M per year. (1) In generalIf the taxpayer has eligible gain for the taxable year from 1 or more dispositions of stock issued by any corporation, the aggregate amount of such gain from dispositions of stock issued by such corporation which may be taken into account under subsection (a) for the taxable year shall not exceed the greater of— (A) $10,000,000 reduced by the aggregate amount of eligible gain taken into account by the taxpayer under subsection (a) for prior taxable years and attributable to dispositions of stock issued by such corporation, or (B) 10 times the aggregate adjusted bases of qualified small business stock issued by such corporation and disposed of by the taxpayer during the taxable year. https://www.law.cornell.edu/uscode/text/26/1202 https://www.law.cornell.edu/uscode/text/26/1202
    - zaroth 7y ago
      Not per year! Says so even in the text you quoted, "reduced by the aggregate amount ... for prior taxable years ..." It's $10mm per entity, or 10x what you paid for the stock, whichever is greater.
      - deleted 7y ago
        [deleted]
      - CalChris 7y ago
        Yeah, I see your point. But I think the 10X is still yearly. For a founder, that might not be much. For a funder, that might be a considerable benefit. (B) 10 times the aggregate adjusted bases ... during the taxable year.
- CalChris 7y ago
  Schmidt joined in 2001 and Google was founded in 1998. I think they were well over $50M in valuation by then.
- walshemj 7y ago
  He was to late - someone Like Mat Cuts could have
supernova87a 7y ago
That is not correct. The rule applies if the value of the company __at the time of issuance (stock issuance)__ was less than $50m. For most people at major companies that are going to go public, and got ISOs, this rule wouldn't help you. By the time a company goes public and stock is issued (not talking options here), everyone is hoping to be worth billions.

When you join the company needs to be valued less than $50 million (by the article), the price of the actual stock doesn't matter.

by kreetx 7y ago

When you join the company needs to be valued less than $50 million (by the article), the price of the actual stock doesn't matter.

toomuchtodo 7y ago

Thank you, this is very helpful for me.

jandrese 7y ago

So like Eric Schmidt could use this if he cashed out his Google options?

zaroth 7y ago
Probably. But it’s limited to the first $10mm of gains.
- CalChris 7y ago
  $10M per year. (1) In generalIf the taxpayer has eligible gain for the taxable year from 1 or more dispositions of stock issued by any corporation, the aggregate amount of such gain from dispositions of stock issued by such corporation which may be taken into account under subsection (a) for the taxable year shall not exceed the greater of— (A) $10,000,000 reduced by the aggregate amount of eligible gain taken into account by the taxpayer under subsection (a) for prior taxable years and attributable to dispositions of stock issued by such corporation, or (B) 10 times the aggregate adjusted bases of qualified small business stock issued by such corporation and disposed of by the taxpayer during the taxable year. https://www.law.cornell.edu/uscode/text/26/1202 https://www.law.cornell.edu/uscode/text/26/1202
  - zaroth 7y ago
    Not per year! Says so even in the text you quoted, "reduced by the aggregate amount ... for prior taxable years ..." It's $10mm per entity, or 10x what you paid for the stock, whichever is greater.
    - deleted 7y ago
      [deleted]
    - CalChris 7y ago
      Yeah, I see your point. But I think the 10X is still yearly. For a founder, that might not be much. For a funder, that might be a considerable benefit. (B) 10 times the aggregate adjusted bases ... during the taxable year.
CalChris 7y ago
Schmidt joined in 2001 and Google was founded in 1998. I think they were well over $50M in valuation by then.
walshemj 7y ago
He was to late - someone Like Mat Cuts could have

supernova87a 7y ago

That is not correct. The rule applies if the value of the company __at the time of issuance (stock issuance)__ was less than $50m. For most people at major companies that are going to go public, and got ISOs, this rule wouldn't help you. By the time a company goes public and stock is issued (not talking options here), everyone is hoping to be worth billions.