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Pre-IPO shares tax question

funk-you · 2013-05-21 17:10:21

Hi guys, Just a question around the tax to be paid on shares received at a preferable rate. Example: Join a pre-IPO company and granted pre-IPO shares at 'fair market value' at the time. Say 1000 shares $10 per share as part of your package. Company IPO's and shares jump to $50 per share. Vesting period of shares = 200…

21-05-2013 5:10pm

#1

funk-you

Registered Users, Registered Users 2 Posts: 2,743 ✭✭✭

Join Date: December 2004

Posts: 2570

Hi guys,

Just a question around the tax to be paid on shares received at a preferable rate.

Example:

Join a pre-IPO company and granted pre-IPO shares at 'fair market value' at the time. Say 1000 shares $10 per share as part of your package.

Company IPO's and shares jump to $50 per share.

Vesting period of shares = 200 shares a year over 5 years = 1000 shares.

So...

Buy at: $2000 per year
Sell at: $10000 per year

Profit: $8000

If as soon as each vesting period expires, the shares were bought at the preferential price and sold at the current price. How much and what type of tax would you expect to pay?

Thanks.

-Funk

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