

Basic Tax Law That Every Start-Up Must Know: the 83b Election - keltecp11
http://www.fairmark.com/execcomp/sec83b.htm

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alain94040
Doesn't everyone know this? That's the best deal I know for getting stock in
startups. Don't get options, get stock with a vesting schedule. Get it at fair
price when it's super-cheap (a few cents per share). Buy the stock outright
for fair market value, therefore you pay $0 in taxes.

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anamax
Purchase also starts the clock for determining the difference between long-
and short-term capital gains. This is (currently) a big deal for federal
income tax.

Taxes on the difference between the purchase price and the "value" on the
purchase date is what caused a lot of people problems during the dot-bomb.
They exercised in the money options, owed taxes, and couldn't pay them when
the stock price dropped. (Many of them were trying to hold out for long-term
capital gains rates. Oops.)

Note that CA taxes both long- and short-term capital gains at the same rate.
Jim Clark says that's why he no longer lives in CA.

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swombat
Please don't use all-caps in post titles...

