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Very few employees end up taking advantage of QSBS, its really only investors & the founders, as you actually have to purchase and hold your shares. For early e
by griffinkelly 5y ago
Very few employees end up taking advantage of QSBS, its really only investors & the founders, as you actually have to purchase and hold your shares. For early employees who are typically given options, buying your options, even early, can be an expensive and costly bet to take advantage of a tax break many years down the line.
- romanhn 5y agoIs this true though? In my cohort of early-ish employees that went through a modest IPO, there was definitely some discussion of QSBS in an ex-employee group. That's where I even found out about it, in fact. Buying options (years after company was formed, mind you) was a bet on the company, not on some tax breaks down the line. Holding on to the shares for multiple years after the IPO, now that's definitely a QSBS bet (and still unclear whether a good one, given stock market volatility).
- agency 5y agoI got lucky as an early employee (first engineering hire) who got stock rather than options. I’m not sure how typical it is but I think they didn’t switch to option grants until about a year after I started, though granted they we’re still quite small probably sub-20 employees at that time. I’m very relieved not to be holding options. I got kind of burned by them on my first job. I was forced to sell on the secondary market as they were expiring and I wasn’t willing to take that bet (which was the right choice given the information I had at the time IMO) but they IPO’d a year or so later and are currently sitting at ~4x the price I got. Still, I’m lucky to have walked away with anything.