4 ms·

The difference is that lottery winnings are liquid, you can just pay your tax burden out of the winnings.

iepathos 4y ago
Similarly, taxes are applied to capital gains when stock is sold, not when it is received or bought. The employees would not be taxed just for receiving the stock/ownership, only once they sold it and made it liquid.
- deleted 4y ago
  [deleted]
- double_nan 4y ago
  Taxes are due at vesting.
  - davidlumley 4y ago
    To be clear: taxes are due when you receive the shares. For options, that's when you execute/purchase your options not when they vest. edit: (in the US at least)
    - johnebgd 4y ago
      The taxes can also be due when you receive your options. That can depend on if you purchase your options or if they are granted to you and entitle you to a discount. YMMV but an NQSO purchase agreement can be your friend.
- girvo 4y ago
  No, you can absolutely be taxed just for receiving the stock/ownership.
  - ideamotor 4y ago
    If it’s not worth much and it’s spread across many employees, we aren’t talking about much.
    - deleted 4y ago
      [deleted]
    - NavinF 4y ago
      Wrong. It will be valued at something ridiculous like 20x EBITDA (average for tech related companies) and you'll be taxed on that number.
      - ideamotor 4y ago
        Doesn’t that depend on who values it? Also, I get the impression they have quite a few liabilities.
        NavinF 4y ago
        In the GN interview they said they have plenty of cash. I'm sure they'll have to write down a lot of inventory because prices went down, but for tax purposes their valuation is still going to be very high based on earnings. That's why private companies other than startups rarely go this route.
- googlryas 4y ago
  You're taxed for the value of the stock when you receive it, and you are taxed on capital gains when you sell it, if you're selling it for more than you received it.
Arainach 4y ago
Not sure why I'm unable to respond to iepathos' reply to this comment, but: >The employees would not be taxed just for receiving the stock/ownership, only once they sold it and made it liquid. This is incorrect; the initial grant is income and anything after that is capital gains. This is also how RSUs work.
- macintux 4y ago
  If you click/tap on the relative timestamp next to the comment, you’ll be taken to a dedicated page where you can reply. Same way I replied to yours.
- steveklabnik 4y ago
  Hacker news does not display the reply button for a bit after someone replies to you as a means of trying to blunt quick back-and-forth discussion. My sibling commentor has the workaround.
  - LtdJorge 4y ago
    Oh, hi Steve!
  - macintux 4y ago
    I believe in this case it’s the depth (width?) of the nesting that limits the reply-ability.
- derefr 4y ago
  I know there's probably a reason this isn't done, but: could you not create a new, worthless corporation; distribute its worthless shares to the new employee-owners; and then have this holding corp acquire EVGA, thus instantaneously inflating the value of the already-held equity to ~EVGA's share price?
  - Arainach 4y ago
    Acquire using what assets? You're proposing fraud.

Similarly, taxes are applied to capital gains when stock is sold, not when it is received or bought. The employees would not be taxed just for receiving the stock/ownership, only once they sold it and made it liquid.

deleted 4y ago
[deleted]
double_nan 4y ago
Taxes are due at vesting.
- davidlumley 4y ago
  To be clear: taxes are due when you receive the shares. For options, that's when you execute/purchase your options not when they vest. edit: (in the US at least)
  - johnebgd 4y ago
    The taxes can also be due when you receive your options. That can depend on if you purchase your options or if they are granted to you and entitle you to a discount. YMMV but an NQSO purchase agreement can be your friend.
girvo 4y ago
No, you can absolutely be taxed just for receiving the stock/ownership.
- ideamotor 4y ago
  If it’s not worth much and it’s spread across many employees, we aren’t talking about much.
  - deleted 4y ago
    [deleted]
  - NavinF 4y ago
    Wrong. It will be valued at something ridiculous like 20x EBITDA (average for tech related companies) and you'll be taxed on that number.
    - ideamotor 4y ago
      Doesn’t that depend on who values it? Also, I get the impression they have quite a few liabilities.
      - NavinF 4y ago
        In the GN interview they said they have plenty of cash. I'm sure they'll have to write down a lot of inventory because prices went down, but for tax purposes their valuation is still going to be very high based on earnings. That's why private companies other than startups rarely go this route.
googlryas 4y ago
You're taxed for the value of the stock when you receive it, and you are taxed on capital gains when you sell it, if you're selling it for more than you received it.

Arainach 4y ago

Not sure why I'm unable to respond to iepathos' reply to this comment, but: >The employees would not be taxed just for receiving the stock/ownership, only once they sold it and made it liquid. This is incorrect; the initial grant is income and anything after that is capital gains. This is also how RSUs work.

macintux 4y ago
If you click/tap on the relative timestamp next to the comment, you’ll be taken to a dedicated page where you can reply. Same way I replied to yours.
steveklabnik 4y ago
Hacker news does not display the reply button for a bit after someone replies to you as a means of trying to blunt quick back-and-forth discussion. My sibling commentor has the workaround.
- LtdJorge 4y ago
  Oh, hi Steve!
- macintux 4y ago
  I believe in this case it’s the depth (width?) of the nesting that limits the reply-ability.
derefr 4y ago
I know there's probably a reason this isn't done, but: could you not create a new, worthless corporation; distribute its worthless shares to the new employee-owners; and then have this holding corp acquire EVGA, thus instantaneously inflating the value of the already-held equity to ~EVGA's share price?
- Arainach 4y ago
  Acquire using what assets? You're proposing fraud.