Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Don’t Tax Options and RSUs Upon Vesting

avc.com

Post reply on HN
Print view View original

71–80 of 388 posts

Re: Don’t Tax Options and RSUs Upon Vesting

#71

Post by walshemj »

conanbatt wrote: post #64
eldavido wrote: post #16

I think the way we do options in startups needs a more fundamental rethink. I wouldn't be too sad if the current system falls on its face. I like Buffett's proposal from a few years ago. They don't grant stock, they simply pay cash (bonuses) and if employees want to buy in, it's their money, after all. What's really needed is a way some group of insiders in a company can transfer shares among themselves or outsiders.…

The main problem i see with the equity system is that its absolutely intransparent in terms of cap tables and preferred shares. To the very least, if companies were forced to give out cap tables, or at least, a calculator that gives you your payout based on the company sell out cases, you would be able to measure it. Right now, the calculation is complicated and obsfucated for employees. Lets say you have 1% of stock…

Or like in the uk for approved (ie tax friendly) enforce the issuing of the same shares to employees as the others.

Re: Don’t Tax Options and RSUs Upon Vesting

#72

Post by seattle_spring »

ransom1538 wrote: post #69

"The current draft of the Senate Tax Reform Bill would tax stock options and RSUs upon vesting." Ok. I wouldn't panic here. Calm down. How shares are vested is up to the board. So, if this were to pass I would just walk into the CEO's office with a few employees and ask to change how shares vest to: "Upon the vesting schedule AND a written letter from the employee requesting vesting. If the letter isn't submitted the…

Why would someone from a large publicly traded company panic? Shares already are taxed upon vest there.

Re: Don’t Tax Options and RSUs Upon Vesting

#73

Post by austenallred »

nsxwolf wrote: post #70
austenallred wrote: post #18

The importance of this change can’t be understated; this effectively kills compensation at startups in the form of equity, and would make startups completely unable to compete with incumbents. Anyone that has options at a company that grows quickly would be paying tens or hundreds of thousands in taxes to keep their equity, which is still effectively a very risky bet that a company will end up huge. No one would want…

Can I give back my options if this bill passes? I'm literally sick now reading this. What I thought was a great part of my compensation package is literally going to bankrupt my family.

Yes you can just give them back, but I would be shocked if the bill passed this way.

This clause wasn’t in the House version of the bill. Call your senator.

Re: Don’t Tax Options and RSUs Upon Vesting

#74

Post by lgleason »

ransom1538 wrote: post #69

"The current draft of the Senate Tax Reform Bill would tax stock options and RSUs upon vesting." Ok. I wouldn't panic here. Calm down. How shares are vested is up to the board. So, if this were to pass I would just walk into the CEO's office with a few employees and ask to change how shares vest to: "Upon the vesting schedule AND a written letter from the employee requesting vesting. If the letter isn't submitted the…

I would also add a clause where if you meet the timeframe to vest, you can exercise that within a certain time of leaving the company irregardless of the reason for leaving (IE: termination for cause etc.) to ensure that employees get what they earned.

Re: Don’t Tax Options and RSUs Upon Vesting

#75

Post by ransom1538 »

seattle_spring wrote: post #72
ransom1538 wrote: post #69

"The current draft of the Senate Tax Reform Bill would tax stock options and RSUs upon vesting." Ok. I wouldn't panic here. Calm down. How shares are vested is up to the board. So, if this were to pass I would just walk into the CEO's office with a few employees and ask to change how shares vest to: "Upon the vesting schedule AND a written letter from the employee requesting vesting. If the letter isn't submitted the…

Why would someone from a large publicly traded company panic? Shares already are taxed upon vest there.

Yep. That isn't about publicly traded companies. The only people that would panic is if you are in a startup that cannot exercise.

Re: Don’t Tax Options and RSUs Upon Vesting

#76

Post by bnjmn »

Here's the statement I plan to read to my representatives:

I live in Greenpoint, Brooklyn. I work for a small startup of less than 30 employees.

Three years ago I left a large, publicly traded tech company to take this job, because of the potential I saw in the work the startup was doing.

I took a significant pay cut when I joined the startup, a decision that was justifiable only because of the distant future value of the incentive stock options that the startup promised me.

It is my understanding that the current tax bills on the floors of the house and the senate would tax these options when they first vest, long before I could possibly sell them to cover my tax bill.

If I am wrong about this, I would appreciate any clarification you can provide, ideally written into the text of the bills themselves.

If my understanding is correct, I honestly don't know how my startup, or other small companies like it, will be able to compete with wealthy public tech companies as we try to hire new employees in an already extremely competitive market.

I struggle to understand how draining talent from the most innovative small tech companies can possibly be construed as a good thing for our economy.

Thank you for your time.

Re: Don’t Tax Options and RSUs Upon Vesting

#77

Post by iamcasen »

neom wrote: post #67
oneshot908 wrote: post #40

Earlier quoted context omitted.

I think the way to look at this is as yet another attempt by dying but deep-pocketed industries to buy themselves a few more years of oxygen whilst their executives either retire and GTFO or they desperately pivot to the scary new age of Tech and AI that is already upon us. IMO it's not partisan, it's just business. further, this already happened once with AMT and Dotcom 1.0, leaving a bunch of rank and files with hu…

no new money millionaires disrupting the status quo, please.

My thoughts exactly. There can't be any other reason for it.

Re: Don’t Tax Options and RSUs Upon Vesting

#78

Post by cmrdporcupine »

tome wrote: post #5
cletus wrote: post #4

So we need to split this issue between companies that are public (or otherwise have liquid equity) and those that don't. For the big companies it's pretty easy. They're largely RSU based. Shares are vested/released. Many companies allow full autosale. Easy. Even in the case of selling enough shares to cover withholding your still left with something very liquid. Options in public companies are in basically the same b…

> I do think it's a reasonable complaint to get taxed on something you can't liquidate. One way to sidestep this would be to force the taxing authority to take some of the options as payment, rather than cash. You've been granted 100 options at a value of $x each and the tax rate is 20%? Just give them 20 options. That way it doesn't matter what x is or whether the market is liquid!

This suggestion might actually force some of the startups that play dubious games with stock values (not disclosing total # of shares issued and current values) and preferred shares and the like to be more above board. In a way getting taxed on these things would at least make it clear what their 'value' is.

Re: Don’t Tax Options and RSUs Upon Vesting

#79

Post by closeparen »

herodotus wrote: post #57

What does it mean for an RSU to "vest"? My understanding of RSUs is that it means the company will give you some shares if you still work there at some specified date. Vesting is a stock option concept - the time at which you can choose whether or not to sell some of the granted shares. Which means that you can sell some shares to pay your taxes when the shares vest. Is the current proposal meant to tax the RSUs when…

My RSUs vest at the latter of the time-based condition (schedule) and performance-based condition (company liquidity event). The proposal is to make this taxable income purely at the time-based condition, when they may still be illiquid.

Re: Don’t Tax Options and RSUs Upon Vesting

#80

Post by oaijdsfoaijsf »

bnjmn wrote: post #76

Here's the statement I plan to read to my representatives: I live in Greenpoint, Brooklyn. I work for a small startup of less than 30 employees. Three years ago I left a large, publicly traded tech company to take this job, because of the potential I saw in the work the startup was doing. I took a significant pay cut when I joined the startup, a decision that was justifiable only because of the distant future value o…

Maloney is a Democrat, though, and will likely vote against the tax bill with or without your say so. Both of our senators are also Democrats. Not that it wouldn't be helpful to provide them with ammunition against the tax bill, just saying that this is not really going to move the needle much in terms of actual votes.
Post reply on HN