4 ms·
I am trying to grok this bit. If I understand it, an 83(b) election allows me to buy stock in the company at the (say) day of employment, and recognise that as
by lifeisstillgood 5y ago
I am trying to grok this bit.
If I understand it, an 83(b) election allows me to buy stock in the company at the (say) day of employment, and recognise that as income on the same day (ie I buy the stock as I join). Then there is some restriction on me selling it during my employment (not quite vesting but similar).
Which sounds sensible - but I may have misunderstood.
Overall it seems either people are trying to make a simple situation seem complex, or the (US?) tax code is set up badly.
http://www.startupcompanylawyer.com/2008/02/15/what-is-an-83b-election/ http://www.startupcompanylawyer.com/2008/02/15/what-is-an-83...
- nemo44x 5y agoYou are exercising options that haven’t vested yet. But because strike and FMV are the same you have no tax liability. So when they beat they become stock and long term capital gains if they become liquid one day. Here’s the best part - if the company is worth < 50m at the time then you are granted and exercise them, when you sell those stocks one day, you will owe 0 income tax as it’s a “qualified small business stock” - on your first 10m of profit. Wowza’s!
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