On Aug 31, 2009, at 12:19 AM, Avi Deitcher wrote:

Heh, I need to disagree with Jonathan once, since we usually agree on stuff!

This paragraph below can lead you astray:

....

Any time there is a vesting period, included restricted stock, it is considered payment for services rendered and subject to tax, sometimes hefty tax. When restricted stock is awarded, there is a way to pay tax on the current value (Section 83(b) election, I think), so that the rest is capital gains only when sold, but you *must* consult an accountant/tax attorney to be safe. Similarly with options, depending on if they are qualified ISO or unqualified.

Short form is: whatever you do, there are tax implications, and they can be huge. Consult expert advice.

Actually we're in agreement. ?Perhaps my wording was bad.

What I wanted to convey is this:

? ? ? ?If you do reverse vesting, you are awarded everything when it is valued at .001?, and then you lose restrictions, and then sell at $1,000.
? ? ? ?If you do front vesting, you are awarded options at .001?, then purchase them when they're worth $100 and sell at $1000.

? ? ? ?In other words, in reverse vesting you buy .001? stock for .001?; in front vesting you buy $100 strock for .001?. ?Its more than semantics, its that you have two different income valuations. ?in one you have capital gains which are taxed on sale, in the other you have actual compensation/advantage in the form of discounts.

? ? ? ?Those are two completely different tax schemes, and you should def speak to an expert accountant.

? ? ? ?However in my experience, the easier/better way has been to handle things as reverse vesting -- as your taxes implications are generally concerned with "when you got them" and "when you sold them".





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