What I Wish I'd Known About Equity Before Joining a Unicorn

Re:What I Wish I'd Known About Equity Before Joining a Unicorn by beagle3 on Wednesday January 18, 2017 @11:18AM (#13427443)

Most countries have sane tax codes that say you only owe taxes when there's a liquidity event for you. The US is exceptionally bad in this respect of taxing illiquid paper profits, and of onerous lockup periods (SEC rule 144).

An investment of mine that yielded 5X exit transaction ended up being 1.3X for those reasons, and I was lucky - if it closed a couple of months earlier, I would end up with 40% loss and a useless tax credit.

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Re:What I Wish I'd Known About Equity Before Joining a Unicorn by vacri on Wednesday January 18, 2017 @03:54PM (#13430175)

Australia is even worse in that you owe tax on the options, before any event of any kind has occured. I think that they're pushing through legislation now in order to make it more US-like and allow founders to offer these worthless lottery tickets to potential employees :)

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Re:What I Wish I'd Known About Equity Before Joining a Unicorn by ant6n on Wednesday January 18, 2017 @06:47PM (#13431609)

I Canada I can defer paying the (income) taxes on the options exercise until 'deemed disposition', which unfortunately also includes going bankrupt. And the possibility to count the capital loss against the income is severely restricted.

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Re:What I Wish I'd Known About Equity Before Joining a Unicorn by uiri on Wednesday January 18, 2017 @11:58PM (#13433140)

Canada has a much better treatment of capital gains than the US. Instead of a separate tax, 50% of the gain is taxed as ordinary income.

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