4 ms·
I could be wrong, but isn't this what 83b is for-- so you don't have to take the tax hit until you can actually sell your stake?
by pwnstigator 17y ago
I could be wrong, but isn't this what 83b is for-- so you don't have to take the tax hit until you can actually sell your stake?
- grellas 17y ago83(b) is needed when someone is granted stock that has a risk of forfeiture and so is normally used with restricted grants or with options that have an early exercise privilege (in which the stock is granted subject to repurchase of any unvested stock on termination of the service relationship) (see http://grellas.com/faq_business_startup_004.html http://grellas.com/faq_business_startup_004.html for a full explanation). In this case, if a restricted stock grant is made, the grant is taxed at the fair market value of the stock on date of grant - this constitutes ordinary income to the recipient. An 83(b) filing in such case would only shelter the grant from further tax hits as it may vest down the road should the fair value of the stock go up even more by the time it reaches the various vesting points. Thus, the basic point used in the illustration above is correct. There would be as much as $50K in taxable income realized in such a case.