

Is it illegal to give away stock? - sharemywin

Is it illegal to give away stock?
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cjbprime
As noahc says, this question is too vague to be useful. But here's some
examples of rules regarding stock transfer.

If you're in the US and talking about stock in a private company, stock is
often "not transferable". You can choose to sell it, but you might only be
allowed to sell it to current investors, and the company might have a clause
that says that if you try to sell it to someone they don't want you to sell it
to then they have the option to buy it instead of the other person, and
there's all kind of things like rights of participation that are designed to
keep ownership percentages in line, and it's very complicated.

Note that these examples are not _illegal_ , they're just disallowed by the
terms set by the company that you acquired shares in. When you acquire the
shares, you agree to the terms.

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noahc
Without more details, particularly, which country you're in no one can answer
this question. Are you giving it to a person or a non-profit? How much? Why
are you doing it? Are you trying to make a company have more shareholders? Are
you trying to 'share your winnings' ?

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sdrinf
One specific problem (amongst the many others pointed out in this thread) is
stock transfer generally triggering a tax event. Specifically, gifting of
stock requires, by IRS -amongst other reporting requirements- for you to: 1,
calculate the value of the company; 2, determine the valuation of the stock;
and 3, pay taxes on given year against that valuation.

In most startup contexts, 1 & 2 is both costly, time-consuming, and non-
productive, while 3 is not really desirable. There are structured ways to have
founders, and stakeholders stock (or first proxies thereof) of the company in
their assets without triggering these. Kindly consult with your accountant to
figure out what these might be.

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philrea
of course not, you do it every month or so through proxy voting...

seriously though, wouldn't it be considered a gift? if so and my thinking is
correct and gifts are taxable then... just be sure to pay your taxes

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lily2014
It depends on how you give it away.

