83(b) Election Form

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An 83(b) election must be filed with the IRS within 30 days of the grant of restricted stock. There are absolutely no exceptions. It’s also a good idea to send the letter via certified mail, with a stamped return receipt. While there is no official form, the IRS does suggest using the following format: Section… continue reading »

83(b) Election

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Summary This can provide for some valuable tax advantages. However, an 83(b) election is only available for restricted stock — not restricted stock units (RSUs) or stock options. With an 83(b) election, the IRS will consider that you have vested the shares at the time of the grant. This means you can begin the timing… continue reading »

Restricted Stock Units (RSUs)

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Summary Unfortunately, there is much confusion with restricted stock. For the most part, it is often mistaken for restricted stock units (RSUs). And while both are very similar, there are still important differences. Restricted stock is where a company grants shares directly to an employee or contractor. But the person will not be able to… continue reading »

Restricted Stock Units (RSUs) Guide

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Restricted stock units (RSUs) have become more common.  So what are they?  Well, before going into this, it is a good idea to make sure you have some understanding of the following: What Are Stocks? What Is An IPO? OK, now here’s a look at RSUs as well as the importance of the 83(b) election:… continue reading »

Federal Tax Guide

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Summary The type of tax you pay is generally based on the income you receive: Ordinary income: This includes most of the money you make, such as wages, commissions, interest, dividends, self-employment income, alimony, distributions from IRAs/pensions and so on. Capital gains: These are gains from the sale of a capital asset, such as a… continue reading »

Option Grant Percentages

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What should you ask for when getting an option grant? Well, a company will often have a set of tiers for certain types of employees — and these tiers represent percentages of the amount of shares set aside for option grants (this is called the “option pool”). Yes, the percentages can vary. But for a… continue reading »

Vesting

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Summary When a company grants you an option, you usually have to wait for a period of time until you can purchase the shares. This is known as vesting. For the most part, this is to incentivize you to stay with the company. Types of Vesting Graduated Vesting. This is when you vest a certain… continue reading »

Exercising an Option

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Summary The exercise of an option is when you make a purchase of shares. When this happens, there may be tax consequences, which depend on whether you have an incentive stock option or a nonqualified option. A company will usually provide a form to fill out when you make an exercise. And of course, you… continue reading »

Introduction to Employee Stock Options

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Summary A stock option is a contract between you and a company. Essentially, it gives you the right to buy a fixed number of shares of the company’s stock at a fixed price (also known as the exercise price). However, you typically must wait for a period of time until you can purchase the shares…. continue reading »

What is an Initial Public Offering (IPO)?

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An IPO is the process by which a company sells shares to the general public (often this is for the first time). Investment banks facilitate the transaction. Examples of top firms include Goldman Sachs and Morgan Stanley. Here’s an example of how things work: ABC Corp. retains Goldman Sachs to do an IPO. The firm… continue reading »