As your company’s public offering date approaches, preparation is everything. To take full advantage of this rare financial opportunity, it’s critical to understand exactly what type of options and/or equity you have, the tax implications they carry, and when you’ll be ...
Many Americans who can comfortably do so include regular charitable giving in their financial planning strategy. If your goals include helping charities that support causes you care about, it’s important to understand that how you give can have just as much impact as ...
Qualified small business stock (QSBS) is a type of investment that gained special tax treatment in 1993 as part of the Revenue Reconciliation Act. The move was intended to incentivize investment in small businesses. Since its introduction, however, Section 1202 of the ...
When you acquire stock options from your pre-IPO employer, your liquidity is severely limited. The most common ways executives and employees are able to sell their private company shares is through IPO, SPAC acquisition, or direct listing on a public exchange. However, ...
Now that you’ve sold stock in your company, careful planning is necessary to make the most of your gains so they can support your highest goals. This includes protecting your gains, wisely managing your remaining investments, and maintaining awareness of ever-changing ...
Stock in your rising company can present a once-in-a-lifetime opportunity to build wealth. To make the most of it, however, it’s important to understand the nuances involved in buying, selling, and tax planning. Once you’re holding vested shares, you face important ...
One question that executives and employees frequently pose during the portfolio planning process is related to RSU shares: Should I leave my RSU shares as they are, or is now the right time to sell? They may also ask whether it’s wise for anyone to sell off financial ...
When the market turns bearish, investors want to know how they can best protect their assets and secure their financial future. It’s always important to keep in mind certain fundamentals, such as the cyclical nature of the market and the importance of diversification, ...
The turbulent economy is impacting the way startups do business. The bear market, steep inflation, and global volatility have many companies instituting a variety of cost-cutting measures, such as consolidations, IPO delays, hiring freezes, and layoffs. If you’re among ...
In part one of this two-part series, we reviewed how an 83(b) election works, how it can reduce taxable income, and the potential drawbacks of filing the election. In part two, we’ll look more closely at how 83(b) applies (or doesn’t apply) to different types of equity ...
If your company is headed toward public offering, whether through IPO, SPAC, or direct listing, it’s likely you’re wondering how you can make the most of your equity compensation. While this can take several different forms, this article will specifically examine the ...
Peak ripeness can be elusive. When you buy avocados, it’s often for a specific purpose. Maybe you’re planning to have fajitas for dinner this week or make guacamole for a party. If you start worrying about whether the avocados are at the peak of their ripeness, ...
In the first three parts of this series, we used an avocado analogy to discuss when it’s time to exercise your stock options (pick the avocados), what it takes to be ready to sell your shares (make guacamole), and how to keep more of that guacamole for yourself and ...
In parts 1 and 2 of our analogy between stock options and avocados, we discussed the importance of understanding when your stock options are ready to pick (exercise) and your shares ready to slice (sell) depending on what type you have (ISOs or NSOs). In this ...
Amazing guacamole comes from knowhow. As any amateur dip maker can tell you, the key to great guacamole is great avocados. Picking the right avocados from the market is an art as much as a science. When it comes to your stock options understanding when your options ...
As your company approaches IPO, you have a lot of important decisions to make. If you’ve received stock options or a restricted stock award, you may be able to take advantage of Internal Revenue Code Section 83(b). Under certain circumstances, this provision allows ...
What is an 83(b) election? When you file an 83(b) election, you’re taking advantage of section 83(b) of the Internal Revenue Code (IRC). This provision allows early investors in a company, including employees receiving equity compensation, to calculate and pay tax on ...
Stock options are a form of compensation that many startups and other companies offer their employees and other key players in the company. A stock option is a contract in which the company issuing the stock grants the right to purchase a certain number of shares at a ...
What is an 83(b) election? An 83(b) election is a way to potentially limit your tax liability for gains on shares of company stock. It allows you to pay taxes on shares before they vest, when their value may be still relatively low. You may choose to file an 83(b) ...
Restricted stock awards (RSAs) and restricted stock units (RSUs) are two types of incentive programs that are common in startup companies. While similar, there are some key differences in how these benefits are delivered and taxed. Both require careful tax and ...
Your company is going public. Whether that happens via a SPAC or the traditional IPO process, you have several important decisions to make in the near future. There are some key differences between the two processes, however, that can affect how you manage your stock ...
Many companies that offer stock options as part of their compensation packages allow employees to exercise those options before they vest. This practice is known as early exercise, and many employees in pre-IPO companies have successfully used it to avoid hefty tax ...
If your company offers an employee stock purchase plan (ESPP), it could provide a path to future wealth. Like any investment, however, participating in an ESPP carries risk. Before signing up, you should understand how an ESPP works, the specific provisions of the plan ...
We've previously explained the benefits of ISOs and how they differ from NSOs, but there is still an important concept to discuss. When ISOs are exercised and held for one year (two years from the grant date), the gain receives capital gain treatment, while NSO gains ...
COVID-19 hit the stock market hard. A little over six months ago, WRP held a webinar for all our clients to discuss the state of the market. It was bleak indeed. COVID-19 was raging all over the world, and many places had commenced shutting down. It got worse. On March ...
The most exciting (and uncertain) time to be in a company is the beginning. With little in the way of pay and much in the way of work, companies have to get creative when it comes to compensating their employees. This is why those who join early with a startup often ...
Nothing hinders a good decision like greed. While there is nothing wrong with setting goals to earn more in life—which is an idea our entire economy is built upon—when greed grabs hold, we often make bad decisions that can ultimately destroy our long-term success. It’s ...
The numbers don’t lie: Americans are very charitably inclined people. The U.S. has ranked at the top for charitable giving over every country for the last 10 years. So, it should come as no surprise that a number of our clients have participated or plan on ...
What to do with your stock options when the market is in the preverbal toilet? Nobody likes stock market declines. From 401ks to 529s, a bear market is hazardous to one’s wealth. However, there are five things that you can do to set yourself up for success when the ...
In Part I of “The Importance of 83(b),” we conducted a survey of the 83(b) election and discussed in what context the election made sense when it came to restricted stock awards (RSAs). In Part II, we looked at examples of 83(b) elections for RSAs. Now, in Part III, ...
In Part I of our discussion about liquidity for startup employees, we looked at liquidity options that a company may provide for employees with illiquid stock—specifically tender offers and stock buybacks. In Part II, we’ll discuss one option that the employee can ...
As the number of startups hit new heights in the Silicon Valley and various companies are utilizing equity to help attract, retain, and motivate skilled workers, the term “incentive stock option” is becoming more common in employment contracts. Although many will use ...
In Part I of “The Importance of 83(b),” we shared a survey of the 83(b) election, and discussed in what context the election made sense when it came to restricted stock awards (RSAs). In this post, we are going to go through some examples of what can be accomplished ...
If you work for a late stage startup, you are most likely suffering from both mental and physical fatigue. You’ve worked for many years with the expectation of a big payout from your stock options, but the company doesn’t seem in any rush to go public. “Unicorns” ...
As we sign on the dotted line and say yes to a job offer, many of us do not completely comprehend the full effect of what we are signing. Aside from income tax on the base salary, we often overlook the tax consequences caused by the other big variable—stock ...
Most people have heard of the famous Internal Revenue Code sections 401(k), 403(b), 121, and 1031, yet there are a few that tend to slip under the radar for most taxpayers. One code section that has a meaningful impact on a taxpayer’s return is 83(b). What is 83(b)? ...