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Net Exercising Your Stock Options

Net Exercising Your Stock Options

Net exercising is essentially a  cashless exercise where you tally up the total net value of your stock options based on the number of vested shares multiplied by the spread between the current Fair Market Value (FMV) and your exercise price(s). That total value is then divided by the current FMV to determine how many shares you get. This total value is then taxable to you at ordinary income tax rates. Since your stock isn’t actually liquid yet, the tax obligation from a cashless exercise can be quite burdensome. Private companies rarely offer a cashless exercise feature because the stockRead More

Cash for Your Escrow Payments

Cash for Your Escrow Payments

Do you need cash for your escrow payments? Were you a shareholder of a venture backed company and will receive future sales proceeds from an escrow release and want cash now? We pay cash for your right to receive your escrow (future sale proceeds) payments. Why take the risk that the escrow may never pay off or wait for years to get paid?When a company sells itself, shareholders typically receive an upfront payment and there are often future sales proceeds that are held in escrow and released in the future. These escrow payments may never be made — they dependRead More

tax reform affect stock options

How Will the 2018 Tax Reform Affect Your Stock Options?

How will the Trump-GOP tax reform affect stock options? The 2018 Tax Cut & Jobs Act may have negatively impacted taxes for employees in the top 2 venture-destinations, California and New York, but the overall changes were for the better. Alternative Minimum Tax (AMT) wasn’t eliminated but then again the threat to tax options at vesting instead of exercise didn’t pass either. Qualified Incentive Stock Options (ISOs) ISOs are still subject to AMT, but the following have a significant impact. The exemptions for AMT have been raised to $70,300 for tax payers filing as individuals or $109,400 for those filingRead More

Questions about employee stock options

Get Your Answers Today

If you have questions about employee stock options, get your answers today. Scott Chou answers Quora questions such as: Is it wise to exercise my stock options of a private company on a regular basis or should I wait until I leave the company? What is the difference between a strike price and option value of stock shares at a startup? What is the process for exercising ISO’s at a private company? How is the spread calculated for my W2? What is an unvested option? Do startups have any obligation to notify employees of an impending stock option expiration? I wantRead More

Avoid ISO Payroll Taxes

Avoid ISO Payroll Taxes

At a liquidity event such as an M&A, unexercised stock option grants are typically cashed out for a value equal to the spread between the exercise price and the liquidity price per share net to common stockholders. When the company executes such a payout, it is considered a compensation event and subject to payroll taxes. This includes both the employee’s medicare tax and the employer’s payroll taxes.When the company executes such a payout, it is considered a compensation event and subject to payroll taxes. However, if the ISO grant is exercised before the M&A event you can avoid ISO payrollRead More