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Stripe Is Raising $6B to Resolve Employee Tax Issue - https://news.ycombinator.com/item?id=35074633 - March 2023 (23 comments)
Edit: there's also https://www.reuters.com/article/us-stripe-funding-breakingvi... - thanks dvt (https://news.ycombinator.com/item?id=35075013).
Earlier quoted context omitted.
They certainly can let the old RSUs expire worthless, but holding up the "social contract" (as opposed to the strict legal contract) with their employees (and former employees!) while also not drawing the ire of the IRS may be a challenge. If you give new RSU grants, what time period do they vest over? What happens to current employees who leave before then, if they are required to re-earn-out their comp? What can yo…
I don't think the company would be in trouble with the IRS if the rsu's are not exercised. I also don't think it would be breaking the social contract if the employees were granted new replacement rsu's with term limits that aren't contingent on employment. It's not that different then unemployed sitting on vested stock waiting for an IPO or liquidity event. Maybe I don't understand something in the tax law, which is…
Earlier quoted context omitted.
If you do an 83b election on RSUs, you'd recognize the entire present value of the RSU grant as income in that year, and pay taxes on it. I believe you're then limited to claiming capital losses on that if you leave before it all vests, or it all ends up worthless. Stripe was already worth $9B in 2016. If you joined then, it could have been prohibitively expensive to do an 83b election. The whole point of RSUs is tha…
> Thus far no successful tech company (that I know of) has screwed over its employees by casually choosing not to have a liquidity event It depends on if you want to rank Foursquare as "successful", but they recently did that, and it was big news in the don't-let-RSUs-expire community. https://www.theinformation.com/articles/the-private-tech-com...
I'm not following why there is a tax bill. If the stocks are founder stock or RSU, then the employee should have done an 83b election to avoid paying tax as they vest. If they are options, then the employee is under no obligation to exercise them, and owes no tax until they are exercised. What am I missing?
Oh, look another train wreck caused by a non-public company offering "equity" based compensation.
The knife cuts both ways. Just as these stories exist, there are plenty of folks who have fell into life changing or generational wealth through equity comp. Treat it for the lottery ticket it is.
What a mess where you need to pay a fortune to exercise options in a risky startup where any liquidity event is open to manipulation and you are operating with imperfect knowledge.
Did the CEO/CFO not see this one coming? Or was it a calculated gamble they took and lost on?
Earlier quoted context omitted.
If you do an 83b election on RSUs, you'd recognize the entire present value of the RSU grant as income in that year, and pay taxes on it. I believe you're then limited to claiming capital losses on that if you leave before it all vests, or it all ends up worthless. Stripe was already worth $9B in 2016. If you joined then, it could have been prohibitively expensive to do an 83b election. The whole point of RSUs is tha…
Can they not just let the old RSU was expire and provide new grants with an equivalent number of shares? That prevent the tax on exercising non liquid shares. Similarly, why not just offer to buy the stock back at current valuation and leave it up to the employees to settled any taxes
Earlier quoted context omitted.
They certainly can let the old RSUs expire worthless, but holding up the "social contract" (as opposed to the strict legal contract) with their employees (and former employees!) while also not drawing the ire of the IRS may be a challenge. If you give new RSU grants, what time period do they vest over? What happens to current employees who leave before then, if they are required to re-earn-out their comp? What can yo…
I don't think the company would be in trouble with the IRS if the rsu's are not exercised. I also don't think it would be breaking the social contract if the employees were granted new replacement rsu's with term limits that aren't contingent on employment. It's not that different then unemployed sitting on vested stock waiting for an IPO or liquidity event. Maybe I don't understand something in the tax law, which is…
I don't have a full understanding of exactly what language in which laws/documents govern this, but my general understanding is that the IRS would definitely not be happy about that, as it undermines the whole point of the double-trigger RSU.
Oh, look another train wreck caused by a non-public company offering "equity" based compensation.
The knife cuts both ways. Just as these stories exist, there are plenty of folks who have fell into life changing or generational wealth through equity comp. Treat it for the lottery ticket it is.
I certainly wouldn't say plenty. I'd say a lucky few at best.