Re:Stripe Sets One-Year Timetable to Decide on Going Public
by jonas21 on Thursday January 26, 2023 @07:52PM
(#34541098)
> except in the case where the RSUs expire, which makes the company look bad
The benefit of double-trigger RSUs over single-trigger RSUs is that they're not taxed until after a liquidity event (IPO, acquisition, etc). That's nice for the employee as they won't have to come up with extra cash to pay taxes on the RSUs as they vest but before they can sell them.
However, double-trigger RSUs have to expire within 7 years -- otherwise there's not a "substantial risk of forfeiture" and they'll be taxed immediately upon satisfying the time condition just like single-trigger RSUs [1]. It makes sense -- there's no practical difference between a double-trigger RSU that never expires and an illiquid single-trigger RSU, so it would be a tax loophole to treat them differently.
The benefit of double-trigger RSUs over single-trigger RSUs is that they're not taxed until after a liquidity event (IPO, acquisition, etc). That's nice for the employee as they won't have to come up with extra cash to pay taxes on the RSUs as they vest but before they can sell them.
However, double-trigger RSUs have to expire within 7 years -- otherwise there's not a "substantial risk of forfeiture" and they'll be taxed immediately upon satisfying the time condition just like single-trigger RSUs [1]. It makes sense -- there's no practical difference between a double-trigger RSU that never expires and an illiquid single-trigger RSU, so it would be a tax loophole to treat them differently.
[1] https://drsfp.com/insights/pre-ipo-rsus-single-trigger-vs-do...