http://www.emergingenterprisecenterblog.com/ Boston Startup Lawyers & Attorneys for Venture Capital & Financing Entrepreneurs en Copyright 2012 Fri, 30 Mar 2012 11:33:28 -0500 Fri, 30 Mar 2012 11:33:28 -0500 http://www.sixapart.com/movabletype/?v=4.32-en http://blogs.law.harvard.edu/tech/rss I think it would be helpful to explain the more typical case where a person purchases restricted stock subject to vesting for FMV or early exercises an NSO. In those cases, the 83(b) filing is an absolute no brainer. I don't think we see too many companies granting restricted stock for free because of the taxable income it generates. In any event, the example does illustrate the issues with "free" stock, taxes and 83(b)s.

]]> http://www.emergingenterprisecenterblog.com/restricted-stock/more-on-restricted-stock-and-83b/#18759 http://www.emergingenterprisecenterblog.com/restricted-stock/more-on-restricted-stock-and-83b/#18759 OptionsRestricted StockStartup Issues Mon, 15 Dec 2008 19:26:54 -0500 Dave Broadwin One additional twist on the discussion of restricted stock: If the employee has the financial means to purchase the stock when the company starts (for $1,000 in your example), they can get capital gains tax treatment when they eventually sell. They still have to file an 83b, but purchasing the stock can be a good idea when the stock is cheap. The company would want to have a lapsing right of repurchase to simulate the vesting, as you described. The employee has the risk that if the company fails, they will lose their investment. But, when a company is just starting, the stock may be cheap enough that employees are willing to take this risk in order to get the favorable tax treatment later.

]]> http://www.emergingenterprisecenterblog.com/restricted-stock/more-on-restricted-stock-and-83b/#18760 http://www.emergingenterprisecenterblog.com/restricted-stock/more-on-restricted-stock-and-83b/#18760 OptionsRestricted StockStartup Issues Mon, 15 Dec 2008 19:26:54 -0500 Dave Broadwin