71–80 of 190 posts
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I dont understand this. if they're worthless & you can't sell, why do you pay tax as if the stock is worth $90? Edit: Can someone point me to IRS docs? or blog explaining?
an unintended consequence of the Alternative Minimum Tax
For regular (Non-qualified) options, current value - strike is considered ordinary income when you exercise.
Why is this even news? This is the case for pretty much every privately-held company in the valley, because the tax law dictates that [1]. When Pinterest changed their exercise window from 90 days to 7 years, it was big news [2]. When you leave a privately-held company, you have to convert your stock options to stocks to hold onto them, and then AMT kicks in and taxes you on the spread and that often hurt a lot. But…
Have seen this far too often. I was at a successful UK based startup very early on, so my strike price was pennies. Those who joined a year or two later were looking at strike prices in excess of £30 with hundreds shares. Recent investment rounds put the share price at around £120, but as always current employees can't sell until a full sale or IPO. The result? A swell of employees who want to leave/move on but can't…
Not what options are designed for! Not "deferred compensation"?
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If you have the dollar amount and the # of shares, then you can backtrack it to a rough percentage. Also options are a % increase in share price play, so $100,000 strike price can at least give you some information wrt how much $ you can make if the per share price of the company triples, etc. It's not always better to know % and % only. Let's say you get 1% options of a company valued at $10B. Options are priced at…
"If you have the dollar amount and the # of shares, then you can backtrack it to a rough percentage." Perhaps. But if a company will not give you a percentage of ownership and expects you to accept this as compensation, you should quit. Full stop. If the company won't tell you how to fairly evaluate your options, they're operating in bad faith, and should not be rewarded for their sleazy behavior.
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Another detail that's not well-known unless you know someone who's gone through it: buying your shares comes with a huge tax bill. As I understand it, you have to pay tax on the difference between the option price and the value at the time you buy them. So if you have a bunch of options to buy at $10 per share, and the company grows to $90 per share by the time you quit/have to buy your shares, you're taxed on $80 a…
Canada has a good rule for this: There's a special class of company called Canadian-Controlled Private Corporation (CCPC). When exercising options issued by a CCPC, the tax burden is deferred until disposition. https://www.collinsbarrow.com/en/cbn/publications/taxation-o...
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Another detail that's not well-known unless you know someone who's gone through it: buying your shares comes with a huge tax bill. As I understand it, you have to pay tax on the difference between the option price and the value at the time you buy them. So if you have a bunch of options to buy at $10 per share, and the company grows to $90 per share by the time you quit/have to buy your shares, you're taxed on $80 a…
Canada has a good rule for this: There's a special class of company called Canadian-Controlled Private Corporation (CCPC). When exercising options issued by a CCPC, the tax burden is deferred until disposition. https://www.collinsbarrow.com/en/cbn/publications/taxation-o...
You can however use the Allowable Business Investment Loss deduction to deduct half, and if you hold the CCPC shares for two years, you can deduct the other half. So the danger zone is the two year window after exercising.
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Canada has a good rule for this: There's a special class of company called Canadian-Controlled Private Corporation (CCPC). When exercising options issued by a CCPC, the tax burden is deferred until disposition. https://www.collinsbarrow.com/en/cbn/publications/taxation-o...
Erroneous comment referring to legacy tax rules. I've edited it away for clarity.
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Uber isn't publicly traded, so its stock price couldn't have "started crashing." Large investors aren't able to sell because they hold their shares in LLCs. They're able to sell because selling rights are part of the terms they negotiated as part of their agreement to invest. The form of ownership has nothing to do with it, and indeed the use of an LLC as a holding company for corporate stock usually complicates the…
He/she's offering a disclaimer bc he/she's a IBD person so his/her words are likely a bit more tied wrt professional obligations than your average engineer on these boards.
It's been my experience that most non-lawyers on HN/Slashdot posting these disclaimers do so because someone once told them they'd be risking unauthorized practice of law charges if they didn't. That was the case once...before the first dotcom boom...Since then, NOLO and others have successfully challenged these restrictions on offering generalized legal advice in most states (including the ones that matter). Nowadays, you're only at risk of unauthorized practice of law if you're applying the law to a specific person's set of circumstances in a manner which clearly indicates that you are specifically providing advice (or other legal services) to them based on those circumstances. This is why NOLO and other guidebooks don't run afoul of these laws--they only provide general advice, it's not tailored to any particular person's legal situation. On a similar note, applying the law to a third-party's circumstances as part of a discussion is not the practice of law, it's commentary.
It's different for a lawyer. Lawyers are held to higher standards when it comes to online advice, but the risk there is whether the advisee believes that a client relationship has been created opening the lawyer up to malpractice liability. I could say that "Uber should do [X] to deal with legal problem [Y]" because it's obvious that Uber, as a well-funded company, has its own lawyers and would not treat my commentary as actionable legal advice or as resulting in a lawyer-client relationship. But I couldn't say "somethirdpartyperson should do [X] to deal with legal problem [Y]" because that person could reasonably treat commentary by a lawyer suggesting a specific action to address a legal issue as legal advice they can act on, and this belief is legally treated in most jurisdictions as creating a de facto lawyer-client relationship.
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There is a year lockout of Uber employees after an IPO. Source: ex Uber employee.
How's the eng culture?
But then my (white male) interviewer wanted to spend the left over 45 minutes talking about how diverse Uber was blah blah blah and that they were just unfairly represented in the press. I decided not to follow up after that.
Hopefully their culture improves, but it's not somewhere I'd consider working currently.
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Because they're not worthless, they're just not liquid.
I wish one could just give a fraction of your stock equal to your marginal tax rate to the IRS, perhaps plus a small fee.